Why women’s retirement planning requires a different approach

Women face distinct retirement planning challenges: They typically earn less over their careers, receive smaller Social Security benefits than men, spend more time out of the workforce as caregivers and live longer. For advisors, that means accounting for a unique mix of risks that can shape a client’s retirement outlook. 

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On average, women receive roughly $4,800 less annually in Social Security benefits than men, and they hold between one-third to one-half less in retirement savings, according to new research from the AARP Public Policy Institute. 

That gap matters because retired women rely on Social Security more than men: Nearly six in 10 retired women (59%) count it as their main source of income, compared to 47% of retired men, according to a 2025 Transamerica Institute survey. 

READ MORE: Women lean harder on Social Security. Here’s what that means for advisors

The disparity begins during working years. The median weekly earnings for full-time female wage and salary workers are about 16% lower than men, or about $10,000 annually, according to the AARP, reducing lifetime earnings for women and therefore lowering retirement benefits. 

Many savers, including 75% of the women surveyed by the Transamerica Institute, said they worried about whether Social Security funds will be available for them at retirement. 

For all these reasons, Abigail Gunderson, a senior wealth advisor at Houston-based Tanglewood Total Wealth Management, said it’s imperative to help women clients start saving for retirement early. She said she always recommends setting up a 401(k) and maxing it out. 

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“You can also invest in a brokerage account in your name and dollar cost average, so it’s almost like you want to pay yourself,” Gunderson said. “Maybe put at least 10% of what you’re earning and put it in a brokerage account if you can’t do a 401(k) and stock that money away.”

Taking all factors into account

Because women face structural workforce and earnings challenges, including being more likely to have caregiving obligations, they often require a specific financial planning approach, said Polly Hamm, wealth advisor at Mission Wealth in Minneapolis. 

Advisors need to consider multiple factors, including marital status, early retirement and extended lifespans.

“We stress-test their financial plan to say what if they do live longer? What if there’s additional health costs or even long-term care costs?” Hamm said. “Also, their overall support system. Will they have a network of people, if they were incapacitated or not able to make decisions for themselves, help them when they’re older?”

Caregiving can reduce women’s lifetime earnings

Women are also balancing their own retirement planning while allocating wealth toward caregiving. Such demands especially affect the retirement savings of those in the so-called sandwich generation, who care for both their children and their aging parents. Sixty-one percent of caretakers are women, according to AARP. 

READ MORE: Easing the financial frustration of the ‘sandwich’ Gen Xers

Family caretaking relies disproportionately on women, according to recent research from Waterlily, a platform that helps families navigate the health and wealth landscape.

Daughters are nearly twice as likely as sons to provide hands-on care for family members and comprise 65% of children who step in to help their parents. 

“Anyone that takes on a caregiver role knows not only is it mentally taxing, but it is physically taxing,” said Lily Vittayarukskul, CEO and founder of Waterlily. “It comes at the cost of people having to leave the workforce in order to provide enough care.”

Nearly 79% of all care hours are unpaid family labor, according to data from Waterlily. This means that some people’s long-term care completely revolves around the effort and time of one unpaid family member. Providing long-term care also worsens the caregiver’s health, Vittyarukskul said, ultimately driving up the costs of women’s own future long-term care. 

READ MORE: Long-term care costs outpacing retirement income: AARP

Gunderson said she advises clients to start long-term care planning when they’re young. Additionally, she recommends spousal IRA accounts for women who are considering taking time off to be caregivers.

“You can use your husband’s working income to qualify,” Gunderson said. “Women have different stages in life. I stayed at home too, but I kept putting money into my IRA.”

Living longer and health factors

On average, American women outlive men by about five years, meaning they need retirement income to last longer.

But women also face more health issues as they live longer. They are two times more likely than men to develop Alzheimer’s, said Jennifer Baick, vice president of financial planning at the Oakton, Virginia office of Mercer Advisors.

“Seventy-one percent of assisted living residents are women,” Baick said. “They’re widowed three and a half times more than men are, so require long-term care. Often, they’re living longer than they were ever working.”

Considering the compounded factors of health, lifespan and caregiving, saving for retirement has become more crucial than ever for women, she said. 

Traditional financial planning typically accounts for a 20-year retirement and assumes retirees will spend 80% of what they did when they were working. However, Baick has found that to not be the case, particularly when factoring in rising health care and long-term care costs. 

“I don’t feel like women often have the bandwidth or the ability or the earnings power to be able to create the ball of money that they need,” Baick said. “Social Security becomes the only thing they have to rely on, which is really scary.”

To combat this, Baick said a financial plan for women needs to go through their entire lifetime — and consider every potential health and retirement outcome. Clients rarely think that far ahead without an advisor’s nudge, she said.