Uncertainty surrounding retirement finances is a pressing issue. There’s a critical need to close the gap between understanding how to save for retirement and how to manage income during retirement.

While around 73% of women are aware of the steps to build their retirement savings, only 47% understand how to sustain that income throughout retirement. These insights stem from recent research by the Alliance for Lifetime Income.

Retirement Savings a Key Focus for Women

On a positive note, 91% of women surveyed are actively contributing to retirement accounts such as 401(k)s and IRAs, with 55% saving 15% or more of their income. Even among those earning under $100k annually, 83% make contributions and over one-third save 15% or more.

“It’s surprising that, four decades after 401(k)s became standard, most women know how to accumulate funds but struggle with strategies to make those funds last,” stated a financial expert.

Many Women Overestimate Retirement Savings Needs

Women are eager for solutions to their financial concerns. Strikingly, more than half believe they need at least $3 million in savings to retire comfortably, far exceeding the often-discussed $1 million benchmark.

The focus on saving as the sole strategy for retirement overlooks the necessity of developing a comprehensive income plan. Notably, 40% of women indicated that having protected income sources, such as pensions, could ease their worries about depleting their funds.

Protected income can originate from three main sources: Social Security, pensions, or annuities. Yet, many women do not link protected income to annuities, with only 3% viewing annuity purchases as crucial for their future security.

“Many financial professionals have not adequately advised retirement savers, concentrating too much on accumulating wealth rather than on income strategies that extend the lifespan of those savings,” a financial leader remarked. “It’s essential to shift focus towards retirement income planning, especially amid current economic uncertainties.”

Research indicates that women collaborating with knowledgeable financial professionals are more likely to grasp how to sustain their retirement funds, with 58% of those working with advisors knowing the necessary steps compared to just 39% of those without.

Women currently control about a third of all U.S. household financial assets, amounting to over $10 trillion, and this figure is projected to grow significantly in the coming years. Financial advisors must prioritize understanding the retirement income needs of women to provide effective guidance.

Women can educate themselves on retirement income planning through accessible online tools. Organizations like the Alliance and HerMoney offer various resources to simplify the retirement income planning process.