Retirement savings for women presents several issues women should be aware of early in their savings endeavors. Most important is how earning less and living longer has implications for retirement. On average, women live more than five years longer than men, which means that they need enough retirement income to last longer. Additionally, they are more likely to be living alone at some time in their retirement. This makes preparing for their own retirement income even more important while potentially facing more hurdles. Women may be in and out of the work force more often, contributing to lower life-time earnings and less likely to be vested in company pension plans.
Women especially should resist the temptation to keep too much of their retirement savings in cautious investments when retirement is still distant. Over time, too cautious investments tend to lead to lower returns and less money, or even worse, does not keep up with inflation and so actually loses buying power. In order to have a better chance of saving enough to last thru a longer retirement, women should invest more heavily in stocks than cautious investments in their early and peak earning years. As retirement approaches, many people shift to more cautious investments to avoid a big loss just before retirement, but remember that many people will have twenty or more years of retirement spending. (See my posts on Saving for Retirement and Investing.)
But all is not negative. Generally, working moms do get a break for up to a year off for child rearing without incurring a break in accruing company retirement benefits. Even stay-at-home Moms can plan for their retirement regardless of how distant that day may seem. Working spouses can open Individual Retirement Accounts (IRAs) for both themselves and their stay-at-home partners, and these spousal IRAs have fewer of the restrictions that limit IRAs for upper income earners. This applies to both traditional and Roth IRAs.