The Retirement Confidence Gap: Why Women Need a Different Financial Plan

---

Key Takeaways

• Women live an average of 5-6 years longer than men, which means their retirement savings must last significantly longer — often 25-30+ years.
• The lifetime earnings gap means lower Social Security benefits — women earn approximately 84 cents per dollar earned by men, and time out of the workforce for caregiving reduces lifetime earnings further.
• Only 52% of women feel confident about retirement compared to 65% of men, according to the Employee Benefit Research Institute — a gap that persists even when controlling for income.
• The widow’s tax trap, survivor benefit reductions, and single-filer brackets create unique financial risks that disproportionately affect women in later retirement.
• A retirement plan built for a woman’s specific reality — longer timeline, caregiving gaps, survivor planning — performs better than a gender-neutral approach.

---

Table of Contents

1. The Confidence Gap Is Not a Knowledge Gap
2. Longevity: The Planning Factor That Changes Everything
3. The Earnings Gap and What It Means for Social Security
4. Caregiving Years: The Hidden Retirement Penalty
5. The Widow’s Financial Reality
6. Healthcare Costs Hit Women Harder
7. Investment Approach: The Evidence Favors Women
8. Building a Retirement Plan for a Longer Life
9. FAQ

---

The Confidence Gap Is Not a Knowledge Gap

The Employee Benefit Research Institute’s 2024 Retirement Confidence Survey found that only 52% of women feel very or somewhat confident about having enough money for a comfortable retirement, compared to 65% of men. That 13-point gap has persisted for over a decade.

What is striking is that the gap does not stem from ignorance. Women are not less informed about retirement planning. In fact, surveys consistently show that women are more likely to follow a financial plan once they have one, more likely to save consistently, and more disciplined about avoiding impulsive investment decisions.

The confidence gap reflects something more accurate: women intuitively recognize that the standard retirement playbook — designed around a dual-income household with continuous employment and average life expectancy — does not fully account for their reality. They are right to feel less confident, because the risks they face are genuinely different. The solution is not to tell women to “be more confident.” It is to build a financial plan that addresses the specific challenges they face.

Longevity: The Planning Factor That Changes Everything

A 65-year-old woman today has a life expectancy of approximately 86.6 years, compared to 84.1 for a 65-year-old man, according to the Social Security Administration’s Actuarial Life Tables. But averages mask the real planning challenge: a 65-year-old woman has roughly a 35% chance of living to 90, and a 15% chance of reaching 95.

That means a woman retiring at 65 needs to plan for a 25-30 year retirement — not the 20-year horizon that many generic retirement calculators assume. Five extra years of retirement at $60,000 per year in spending requires an additional $300,000 in savings (before inflation adjustments). Ten extra years requires $600,000.

Longevity is not just a planning inconvenience. It amplifies every other risk:

• Inflation compounds longer — 3% annual inflation reduces purchasing power by 45% over 20 years, but by 55% over 25 years
• Healthcare costs escalate — the most expensive healthcare years are typically 80-90+
• Sequence of returns risk is extended — more years of withdrawals means more exposure to poorly timed downturns
• Cognitive decline risk increases — financial decision-making capacity often decreases in the 80s and 90s, making earlier planning even more critical

Thomas’ Take: A retirement plan built for a woman should default to planning through age 95 — not 85 or 90. Running out of money at 92 is not a risk anyone should take when the fix is straightforward: plan for a longer timeline from the beginning. Running out of money at 92 is not a risk anyone should take when the fix is straightforward: plan for a longer timeline from the beginning.

The Earnings Gap and What It Means for Social Security

According to the Bureau of Labor Statistics, women working full-time earned approximately 84 cents for every dollar earned by men in 2024. Over a 35-year career, that gap compounds dramatically.

Social Security benefits are calculated based on your highest 35 years of earnings. If you worked fewer than 35 years — common for women who took time out for caregiving — zeros are averaged into the calculation, reducing your benefit further.

Consider this hypothetical: a woman who earned $50,000/year for 25 years and had 10 years out of the workforce would have her benefit calculated using 25 years of $50,000 earnings and 10 years of $0. Her average indexed monthly earnings would be significantly lower than a man who earned $60,000 for a continuous 35 years.

The result: women receive lower Social Security benefits on average. In 2024, the average monthly Social Security benefit for retired women was approximately $1,560 compared to $1,920 for retired men — a difference of $4,320 per year.

For married women, spousal benefits can help bridge part of this gap. A spouse can claim up to 50% of the higher earner’s benefit at full retirement age, if that amount exceeds their own benefit. But spousal benefits have limitations:

• You must wait until your full retirement age to receive the full 50%
• If you claim early, the benefit is permanently reduced
• If you are divorced, you may still qualify for divorced-spouse benefits if the marriage lasted 10+ years

Caregiving Years: The Hidden Retirement Penalty

An estimated 60% of unpaid caregivers in the United States are women, according to the AARP Public Policy Institute. The financial cost of caregiving extends far beyond lost wages during the caregiving years — it compounds into retirement through multiple channels:

Lost earnings: The average woman loses approximately $295,000 in lifetime earnings and benefits due to caregiving responsibilities, according to AARP research. This includes wages, Social Security benefits, and employer retirement contributions. Lost retirement contributions: Years out of the workforce are years without 401(k) contributions, employer matches, and compound growth. A 5-year caregiving absence starting at age 40 — assuming $6,000/year in 401(k) contributions with a 3% employer match — costs approximately $180,000 in portfolio value by age 65 (including growth). Lost Social Security credits: Those zero-earnings years drag down the 35-year average, permanently reducing the monthly benefit. Career reentry penalty: Women returning to work after caregiving gaps often face lower salaries than they left, further extending the earnings impact.

The financial planning response is not to suggest that women should not provide care — it is to account for these realities in the retirement plan. Spousal IRAs allow a working spouse to contribute to a non-working spouse’s IRA. Catch-up contributions ($1,000 extra for IRAs, $7,500 extra for 401(k)s for those 50+) help close the savings gap during the re-accumulation years.

The Widow’s Financial Reality

Approximately 70% of women will outlive their spouses. The financial transition that follows a spouse’s death is one of the most consequential — and under-planned — events in retirement.

When a spouse dies, the surviving spouse faces the widow’s tax trap: they lose one Social Security check, lose one set of RMD income (which may provide some relief), and shift from married filing jointly to single filing — which has significantly smaller tax brackets.

The practical impact: a couple with $80,000 in taxable income in the 12% bracket suddenly becomes a single filer with $50,000 in income in the 22% bracket. The surviving spouse’s tax rate jumps even though their income dropped. Combine this with the loss of one Social Security benefit, and the surviving spouse — statistically, the woman — faces both lower income and higher taxes simultaneously.

Planning for this transition while both spouses are alive is essential:

• Roth conversions before widowhood reduce future taxable income for the surviving spouse
• Life insurance analysis to bridge the income gap in the years immediately following a spouse’s death
• Social Security survivor benefit optimization — a surviving spouse can claim 100% of the deceased spouse’s benefit if it exceeds their own

In-Article Image Alt Text: Chart comparing financial impact of spousal death on retirement income, showing Social Security reduction, tax bracket shift, and net income change for a hypothetical surviving spouse

Healthcare Costs Hit Women Harder

Longer lifespans mean more years of healthcare spending. A 65-year-old woman can expect to spend approximately 20% more on healthcare in retirement than a man, driven by:

• More years of Medicare premiums — 5-6 additional years of Part B, Part D, and supplemental premiums
• Higher rates of chronic conditions in later years — osteoporosis, arthritis, and dementia disproportionately affect women
• Greater likelihood of needing long-term care — women are more likely both to need and to provide long-term care. The Department of Health and Human Services estimates that approximately 70% of people turning 65 will need some form of long-term care, with women needing an average of 3.7 years compared to 2.2 years for men.

Medicare does not cover long-term custodial care. A private room in a nursing facility averages over $100,000 per year. Even home health aide services average $60,000-$70,000 per year for substantial care.

Women need to explicitly address long-term care in their retirement plan — whether through long-term care insurance, hybrid life/LTC policies, self-insurance from savings, or Medicaid planning for those with limited assets.

Investment Approach: The Evidence Favors Women

Here is the encouraging part of this article: research consistently shows that women are better investors than men. A Fidelity analysis of over 5 million accounts found that women’s investment returns outperformed men’s by an average of 0.4% annually. A Warwick Business School study found similar results.

Why? Women tend to:

• Trade less frequently (avoiding the costs and behavioral errors of overtrading)
• Take fewer speculative risks
• Follow a financial plan more consistently
• Be less susceptible to overconfidence bias

A 0.4% annual return advantage may sound small, but compounded over 30 years on a $500,000 portfolio, it represents approximately $60,000 in additional wealth.

The takeaway is not that women need a different investment strategy — it is that the investment discipline women naturally bring to the table is an asset. The challenge is channeling that discipline into a plan that accounts for the specific structural disadvantages women face.

Pro Tip: If you are a woman approaching retirement and have historically deferred financial decisions to a spouse, now is the time to get actively involved. Understand the accounts, the strategy, and the income plan. You are statistically likely to manage these finances alone at some point, and the transition is far smoother when you have been engaged all along.

Building a Retirement Plan for a Longer Life

A retirement plan built for a woman’s specific reality should address these elements:

1. Plan through age 95, not 85. A 10-year extension changes everything — savings targets, withdrawal rates, asset allocation, and Social Security timing. 2. Delay Social Security if possible. The 8% annual increase in benefits for each year delayed beyond full retirement age is particularly valuable for women because they will collect it over more years. A woman who delays from 62 to 70 receives 77% more per month — for a potentially 25+ year payment period. 3. Prioritize Roth accounts. Tax-free income in later retirement years reduces the widow’s tax trap impact. Roth conversions during lower-income years are especially valuable for women who expect to outlive a spouse. 4. Address the caregiving gap. Use spousal IRAs, catch-up contributions, and aggressive savings during working years to offset time out of the workforce. 5. Build a healthcare cost reserve. Earmark $100,000-$200,000 specifically for healthcare costs beyond Medicare. Consider long-term care insurance or hybrid policies, especially by age 55-60 when premiums are more affordable. 6. Establish a cash reserve for the transition. Have 12-18 months of expenses in liquid savings to cover the period after a spouse’s death, when financial decisions should not be rushed. 7. Create a financial emergency document. List all accounts, advisors, insurance policies, passwords, and income sources. Share it with a trusted person. If something happens to you or your spouse, someone needs to know where everything is. In-Article Image Alt Text: Women’s retirement planning checklist covering longevity planning, Social Security optimization, healthcare reserves, and survivor planning strategies

FAQ

How much more should women save for retirement compared to men?

There is no single multiplier, but a reasonable starting point is 10-15% more in total savings to account for longer life expectancy and higher healthcare costs. If a man needs $1 million to retire comfortably, a woman with similar spending should target $1.1-$1.15 million. The exact number depends on health, family longevity, Social Security benefits, and whether long-term care costs are insured or self-funded.

Should women invest more conservatively because they have longer retirements?

Counterintuitively, no. A longer time horizon is actually an argument for maintaining a meaningful equity allocation throughout retirement — not reducing it. Stocks have historically outpaced inflation over 20-30 year periods, which is exactly the protection needed for a long retirement. A bucket strategy that keeps 5-7 years of spending in conservative assets while allowing the rest to grow can balance safety and growth.

What if I was a stay-at-home parent for most of my career?

You may still qualify for Social Security benefits based on your spouse’s record — up to 50% of their benefit at your full retirement age, or 100% as a survivor benefit. If you are divorced and the marriage lasted 10+ years, you can claim on your ex-spouse’s record without affecting their benefit. These benefits exist specifically to address the financial impact of unpaid caregiving work.

How do I start getting involved in financial planning if my spouse has always managed it?

Start by understanding three things: (1) where all the money is (accounts, balances, custodians), (2) how income will be generated in retirement (Social Security, pensions, withdrawals), and (3) what happens if your spouse dies first (survivor benefits, insurance, account ownership). Ask your financial advisor to walk you through these three areas in a meeting specifically for your education. A good advisor will welcome this conversation.

Is there a benefit to working a few extra years if I have caregiving gaps in my earnings history?

Yes, potentially a significant one. Each additional year of higher earnings replaces a zero-earnings year in your Social Security calculation, directly increasing your benefit. Even part-time work that generates $20,000-$30,000 in earnings can replace a zero in the 35-year average. If you are within 2-3 years of a higher benefit threshold, the added income can pay for itself many times over.

---

The Confidence Gap Closes When the Plan Is Right

Women do not need more confidence about retirement — they need a plan that honestly addresses the challenges they face. A longer life expectancy, lower average earnings, caregiving gaps, and the financial shock of widowhood are not reasons to be anxious. They are variables that belong in the spreadsheet, not sources of vague worry.

When the plan accounts for a 30-year time horizon, optimizes Social Security for longevity, includes a healthcare reserve, and prepares for the surviving-spouse transition — the confidence comes naturally. The gap closes when the math is honest about the longer life, not when someone tells you to feel better about it.

---

---

This article is published by Confluence Media Group LLC, an independent publisher of educational financial content. Thomas Clark is a Series 65 Investment Advisor Representative. The information provided is for educational and informational purposes only and is not personalized financial, tax, or legal advice. Past performance does not guarantee future results. All investing involves risk, including potential loss of principal. Consult a qualified professional before making financial decisions.

Confluence Media Group LLC is a separate entity from Confluence Capital Management, the investment advisory practice through which Thomas Clark provides advisory services. Advisory services are not offered through this publishing platform.

---