Why women should plan for retirement differently from men

• Women often face a unique set of challenges, such as longer life expectancy, the gender pay gap, and additional responsibilities, resulting in pensions that are 20% lower on average.

Retirement is a crucial stage in anyone's life, but men and women face different challenges when planning for it. Women, in particular, must overcome a number of unique obstacles that can significantly affect their financial security in retirement.

All the particularities and challenges have been addressed by writer, popularizer and entrepreneur Natalia de Santiago at an Aula session, the training program on economics and finance aimed at CaixaBank shareholders. During the session, entitled Women, money and future. How to plan your retirement, de Santiago explained the different tools and practical advice for women to plan their retirement more effectively. 

On average, women live longer than men. This means they need more savings to cover a longer retirement period. It’s also important to consider that many women interrupt their careers to care for children, elderly parents, or other dependent family members. These breaks reduce their contribution years and, therefore, their retirement savings. In addition, these pauses can affect their career advancement and promotion opportunities.

Women, in general, earn less than men. This gender wage gap directly affects their ability to save and, consequently, their retirement funds. Lower incomes also mean lower contributions to pension plans and other savings instruments.

Pension gap

All these challenges translate into lower pensions for women, with a gap of 20% less on average compared to men. This pension gap can jeopardize women's financial stability during retirement.

Financial education is crucial to make informed decisions and become financially empowered. Regarding women's lower interest in finance, De Santiago explains that “it is a mistake to blame it on a generation gap”. Women should seek resources and training that will allow them to better understand their financial options and how to manage them. De Santiago encourages “daring to ask questions” to improve education, which will have an impact on future financial decisions and savings management. In addition, she considered that “once we have overcome the education gap, women are as good as men, or better”.

For their part, men are more daring and invest more, they are less afraid of risk, while women are more prudent and cautious with money and make more conservative investments. Added to this is the lack of confidence and security.

Time is also very important, and retirement planning should start as early as possible. “You should start saving from yesterday” says de Santiago, recommending turning finances into a habit, like sports. In this regard, she recommends “doing the numbers regularly. As in sports, you can't wait until you're 60 years old to get in shape”. 

What are the numbers women need to do to live well after retirement? Knowing your savings ratio is essential to ensure that expenses don't exceed income. It is “the cornerstone of wealth,” according to De Santiago. In addition, women should explore various investment options that offer good long-term returns. “Having money that works is key,” De Santiago explains. Techniques such as budgeting and tracking present and future expenses can help keep finances in order. 

Retirement planning is a complex process. However, with proper planning, savings and investment strategies and solid financial education, it is possible to ensure a comfortable and secure retirement.