What women need to know about saving for retirement

Women currently control about one-third of U.S household financial assets — more than $11 trillion¹. By 2030, their share is expected to rise toward 40-45% of retail financial assets². Some forecasts project that women will control $34 trillion in financial assets in the next decade, up from $7.3 trillion just 10 years ago³.

However, women face unique challenges that can put them at a greater level of financial risk than men.

• Women often start with disadvantages: lower lifetime earnings, career breaks for caregiving and longer life expectancies all add up to a need for greater savings discipline⁴
• 58% of women say they feel somewhat or very confident making financial decisions, but many also report tight budgets and limited room for investing⁵
• Nearly half (49%) of women now consider themselves the “CFO” of their households, up from 41% in 2021. Yet only 64% say they feel financially secure, a decline from 72% in 2021⁶
• Life insurance ownership among women remains modest: about 49% of women own life insurance compared to 55% of men. Nearly half rely on employer-sponsored coverage⁷

Live for today, prepare for tomorrow

With more women assuming financial leadership, both now and in coming years, it’s critical that women know how to save and plan for their future.

The good news is that taking charge of your personal finances doesn’t have to be complicated. Here are four things you can do now to make your money work for you.

1. Know where your money goes

What do you do with your paycheck after bills are paid? Do you know how much you spend each month? How much do you want to put away?

Think about how you spend your money today and create a budget. Start by determining your net income. Then calculate your monthly expenses, including money you want to save, and create a financial plan for your future.

Use a budgeting app or spreadsheet, and set aside money for emergencies before focusing on growth.

2. Build and guard your credit

Gone are the days when people carried lots of cash to pay for purchases. Instead, we reach for the convenience of credit cards, which can help establish a good credit history and credit score when managed properly.

Credit scores affect whether you can get credit, the amount of credit a lender will give you and the interest they will charge you. Generally, your credit score can range from a low of 300 to the highest score at 850. The higher your credit score, the better.

It’s important to keep track of your spending and not charge more than you can afford to pay. Let’s say you have a credit card balance of $2,000 with an annual percentage rate (APR) of 20%. If you don’t charge any more to the card and make the minimum monthly payment, depending on the how the minimum payment is determined, it could take 26 years to pay it off and cost almost $6,500 in interest charges! So, pay your balance in full each month, and if you can’t, pay as much as you can to avoid some of the credit card’s fees and high interest rates.

Resist the urge to open new credit cards for a quick discount. Too many open credit lines, even if they have zero balances, could be considered a negative mark on your credit score.

Paying your bills on time positively affects your credit score and avoids late fees, so it may help to automate recurring household expenses and other bills when possible.

You can get your free credit report once every 12 months at annualcreditreport.com. This is the only website authorized to fill orders for the free annual credit report you are entitled to by law. Other websites that claim to offer free credit reports, free credit scores or free credit monitoring are not part of the legally mandated free annual credit report program, and in some cases, the “free” product comes with strings attached.

3. Protect your financial foundation

Keep in mind, women tend to live longer than men. Women have an average additional life expectancy of 20.7 years after age 65, making it essential for them to be prepared for increased expenses that life insurance may be able to help them with.⁸

Even if you don’t have a spouse/partner or children, if someone depends on you financially, you may want to consider some type of life insurance, and employer-provided coverage may not be enough. You may also want to consider life insurance if someone else would be responsible for your outstanding debts – like credit cards or repaying a mortgage – if you were to pass away.

You buy life insurance based on your age and your health, so buying it when you’re young and healthy typically makes it less expensive than when you’re older. And women tend to pay less for life insurance than men because they live longer. If you already have life insurance coverage, it’s important to review it regularly to make sure it is sufficient.

4. Save strategically and early

How much money do you need for retirement? Experts say you will need around 80% of your pre-retirement income. This percentage is based on being able to eliminate certain expenses in retirement. However, if your retirement dreams include travel or pursuing other potentially costly endeavors, you may want to aim at 90% or 100% of your pre-retirement income. On the flip side, paying off large expenses like a mortgage or downsizing to more cost-effective housing can help you live comfortably on less than 80%.

Here are some key elements to understanding where you are in reaching your retirement goals:

• Know how your state teachers’ retirement system works
• Consider a supplemental retirement savings vehicle to make up the difference between what your pension will cover and where you want to be
• Review your and your spouse/partner’s retirement plans regularly to ensure you’re on the right track

To review your current retirement strategy, life insurance needs or any other questions you may have, contact your Horace Mann representative.

The information provided here is for general informational purposes only and should not be considered a recommendation, investment, tax or legal advice. Horace Mann Life Insurance Company underwrites Horace Mann life insurance products.

Citations

1. Fast Company, Women in the U.S. are about to gain significant wealth — here’s what that means, May 2023
2. McKinsey & Company, How women are reshaping the face of wealth, 2020 (updated 2023)
3. Empower, The $34 trillion shift: Women are reshaping wealth and legacy, 2023
4. Transamerica Institute, Women and Retirement: 24 Facts from the 2024 Survey Report
5. Investopedia / Real Simple, Her Money Mindset Survey, 2024
6. Allianz Life, Women, Money and Power Study, 2023
7. LIMRA, Women and Life Insurance: 2024 Fact Sheet, 2024
8. The Center for Disease Control (CDC), Mortality in the United States, 2023