Women and Financial Independence: The Growing Need for a Tailored Approach
By: Shannon Stophel, CFP®
Published on: 03/10/2025
Women are playing an increasingly vital role in the workforce, with more women working today than ever before. The statistics show that women’s labor force participation rate was 57.3% in November 2024 compared to 43% in 1969. Over the same time period, men’s workforce participation has dropped nearly 12% and currently sits at 67.9%.
Beyond simply joining the workforce, women are taking on greater financial responsibilities within their households. A significant shift has occurred – women are no longer just contributors to household income; they are primary decision-makers. According to the CFP Board, more than two out of three women now serve as their household’s primary decision-makers for investments.
McKinsey & Company reports that women in the U.S. currently control $10.9 trillion in assets, and this number is projected to triple within the next decade.
So, if women are having a greater impact on financial decisions and their influence is only growing, why isn’t the financial industry talking more about women’s unique financial needs? It’s important to understand the differences and challenges women face so we can better help them get to financial independence and create more stability and security in retirement.
- The Gender Wage Gap: Today’s Problem, Tomorrow’s Retirement Crisis
On average, women tend to make less than men doing the same job. Reports consistently show that women on average make only 80% of what men make doing the exact same job. This can severely impact a woman’s ability to save and invest today, for their future retired self.
The Social Security Administration has reported that women, on average, have lower income in retirement than men. With less earned income, there is also less going into Social Security which means a lesser payout for women in retirement for their Social Security benefit.
Today’s wage gap between men and women is bigger than just today’s problem because it’s affecting women’s cash flow in retirement and how much women will have saved when it comes time to retire.
- Longevity and Longer Retirements for Women
According to the American Association of Long-Term Care Insurance, more than two-thirds of Americans age 85 or older are women and eight out of ten centenarians are women. Our aging population is mostly made of women and as we age, our needs can change.
We mentioned above that the Social Security Administration stated women tend to make less in retirement than men due to less income but they also take time off for maternity leave and caregiving responsibilities. Additionally, women typically outlive men by an average of five years, which means they need to plan for a longer retirement.
Women are living longer but saving less, and it’s causing a huge strain to their retirement needs. If women are making less money, living longer but they are not able to save as much as men, then women need to stretch fewer resources over a longer period.
However, planning for longevity isn’t just about saving more – it’s about structuring retirement income in a way that ensures financial security for decades.
- Rising Healthcare Costs and the Need for Long-Term Care Planning
Health care costs are not immune to the recent inflationary pressures that we have seen. In fact, PwC’s Health Research Institute (HRI) forecasts an 8% year-on-year increase in medical costs for the group market and a 7.5% increase for the individual market in 2025. These rising costs affect individuals now and also over time and through retirement.
We often ask individuals what they think their biggest expense in retirement will be, and many women cite healthcare costs, for good reason. Women live longer than men and by living longer, women tend to need more long-term care as they age. The American Association for Long-Term Care Insurance reports that among people aged 75 or older, women are 60% more likely than men to need help with one or more activities of daily living and women spend twice as many years in a disabled state as men at the end of their lives.
Women need a plan for long-term care because it is very likely at some point in retirement, they will need some type of help and unfortunately, the costs of long-term care are only increasing with our aging population and most traditional retirement plans do not adequately account for them. Without proper planning, many may struggle to afford the care they need in their later years.
Summary:
Women’s financial needs are complex, and there is no one-size-fits-all solution to the challenges they face. However, awareness is the first step toward financial empowerment. By recognizing these obstacles and taking proactive steps – such as closing the wage gap, improving financial literacy, and prioritizing retirement and healthcare planning – women can take control of their financial future. The more we understand these challenges, the better we can create financial strategies that ensure women don’t just survive in retirement but thrive.
References:
- Federal Reserve Bank of St. Louis, “Labor Force Participation Rate – Women” https://fred.stlouisfed.org/series/LNS11300002
- McKinsey & Company, “Women as the next wave of growth in US wealth management” https://www.mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/Women%20as%20the%20next%20wave%20of%20growth%20in%20US%20wealth%20management/Women-as-the-next-wave-of-growth-in-US-wealth-management.pdf
- Social Security Administration, “Women and Social Security” https://www.ssa.gov/history/reports/women.html
- PwC Health Research Institute, “Behind the Numbers” https://www.pwc.com/us/en/industries/health-industries/library/behind-the-numbers.html
- American Association for Long-Term Care Insurance, “Women and Long-Term Care” https://www.aaltci.org/long-term-care-insurance/learning-center/for-women.php#:~:text=Reasons%20To%20Plan%3A%20Women%20Need,age%20at%20admission%20is%2080
