As we age, our financial well-being becomes increasingly important. Retirement planning is crucial, especially for women who tend to have longer lifespans, lower retirement savings, and fewer pension benefits than men.
In Iowa and across the nation, women just like you face unique challenges in retirement, but there are ways to help empower yourself and help secure a comfortable future.
Want to take charge of your retirement and help achieve financial security? Here’s what you should know.
Iowa Retiree Statistics
As per the Iowa Department of Aging, Iowa was home for over 305,000 women aged 65 years or more in 2022, making up 55.2% of the 65-and-over age group. Additionally, the number of women aged 85 and above was estimated to be 48,977, comprising 63.8% of Iowans in the 85-and-over age group. Despite the significant number of senior women in Iowa, many encounter financial challenges during retirement.
One reason for this is that women in Iowa, like in all other states, tend to earn less than men over their lifetimes. According to the U.S. Bureau of Labor Statistics, full-time wage and salary working women in Iowa earned a median usual weekly income of $854 in 2020, which was 83.7% of the median weekly earnings of their male counterparts ($1,020).
This table shows median real wages for men and women in 2022 dollars for Iowa and for the U.S.. The observed median wage gaps between men and women for various years are also reported.
The good news? The observed male-female wage gaps for Iowa are smaller than for the U.S. as a whole. Wage gaps for both Iowa and the U.S. have been falling over time.
Women Retirees Face Unique Hurdles
Another challenge for women in Iowa is that they often take on caregiving responsibilities for family members, including spouses and elderly parents. While this is an essential and fulfilling role, it can impact women’s careers and earning potential, resulting in lower retirement savings and preparedness.
Furthermore, while women in the U.S. live, on average, three years longer than men — according to a January 2021 Social Security Administration factsheet – women can be expected to need more savings for a comfortable retirement, yet among retired women, 58% report they collect 50% or less of their pre-retirement income, including Social Security, compared to 44% of men.
How to Help Maximize Social Security Benefits
Because the gender wage gap translates into lower Social Security benefits and retirement savings, it makes it more of a challenge for women to help maintain their standard of living in retirement.
Social Security benefits are a crucial component of retirement income for women in Iowa, so by utilizing Social Security benefits strategically, women can potentially help increase their retirement income.
Women can claim Social Security benefits as early as age 62, but taking benefits before reaching full retirement age (FRA) can lead to a reduction in monthly payments. FRA for Social Security benefits depends on the year of birth and ranges from 66 to 67 years for those born between 1943 and 1960.
However, delaying Social Security benefits until FRA or beyond can result in higher monthly payments. In fact, for each year that women delay taking Social Security benefits beyond FRA until age 70, they can receive an 8% increase in monthly payments. Therefore, delaying benefits until age 70 can result in the highest possible benefit amount.
By understanding the impact of claiming Social Security benefits at different ages, women in Iowa can help make informed decisions about when to start receiving benefits to help maximize their retirement income. Seeking professional advice from your retirement income advisor (preferably a Fiduciary) can help women in Iowa make the most optimal decisions about Social Security benefits and other retirement planning strategies.
Save More for Retirement
Women should strive to save as much as possible for retirement, including contributing to an employer-sponsored retirement plan or individual retirement account (IRA). Catch-up contributions are a great option for those aged 50 and older. To take advantage of catch-up contributions, there are a few steps you can follow:
- Determine your eligibility for making catch-up contributions by checking the criteria for your specific retirement plan. Typically, you need to be aged 50 or above and participating in a qualified retirement plan.
- Review the contribution limits for catch-up contributions under your plan. This information is usually available from the plan administrator or if you’re still working, your HR department.
- If you are eligible, consider increasing your contributions to take advantage of catch-up contributions. However, before making any contributions, it is important to assess your overall financial situation and try to ensure that you have sufficient funds to meet your current and future financial obligations.
- Lastly, if you have any questions or concerns, seek the advice of a financial advisor who is knowledgeable in tax-savings to help ensure that you are taking advantage of catch-up contributions in the most effective way possible.
Consider Healthcare Costs
Healthcare costs can be a significant expense in retirement, especially for women who tend to live longer than men. Women in Iowa should factor in potential healthcare costs when planning for retirement and consider purchasing long-term care insurance.
Long-term care insurance is specifically designed to help pay for the costs of long-term care services. Unfortunately, these services tend to be expensive and are not covered by traditional health insurance plans (Medicare). These services may include assistance with daily living activities such as bathing, eating, and skilled nursing care.
By purchasing long-term care insurance, women in Iowa can help protect their retirement savings and help ensure that they have the necessary funds to cover any healthcare costs that may arise in the future. It is important to carefully review policy terms and conditions before purchasing long-term care insurance to help ensure that the coverage meets your specific needs and budget.
With proper planning and preparation, women in Iowa can help secure a financially stable retirement, even in the face of potentially significant healthcare costs.
Seek Professional Advice
Consulting with a financial advisor can be useful for women looking to help maximize their retirement savings and investments. Financial professionals can help provide personalized guidance on saving, investing, and budgeting. Johnson Wealth and Income Management is a financial planning firm that provides comprehensive retirement planning services to women in Iowa and beyond. We can help you navigate the complexities of retirement and help maximize your financial security.
Our team of experienced Fiduciary advisors can help provide personalized advice and guidance tailored to each client’s unique goals and needs. This includes the following:
- Developing retirement income strategies
- Optimizing Social Security benefits
- Managing investments
- Planning for long-term care and healthcare costs
When you’re able to make retirement planning decisions with the full picture in front of you, everything will be easier to navigate. Recognizing your unique challenges as a woman, shoring up your resources, and equipping yourself with financial literacy is key to making the most of your financial future. It’s never too late to start planning for your retirement, but the sooner you get started the better.
If you’re a woman approaching retirement (or are already there), Johnson Wealth and Income Management can help ensure you are informed and empowered throughout the retirement planning process. Ready to begin your journey?
Contact us today to schedule your complimentary consultation.
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