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Should Women Invest Differently Than Men?

Woman invests differently than a man

The Short Answer Is Yes!

It’s no secret that women face unique financial challenges. On average, they make less, live longer and are more likely to have primary caregiving responsibilities than men. This may lead you to wonder, “Should women invest differently than men?” In short, the answer is yes. Here’s why.

Women must start saving and investing earlier in life.

In 2022, March 15 was considered Equal Pay Day by the National Committee on Pay Equity.1 This date symbolizes how far into the year an average women must work to earn what men earned in the previous year.

On average, women make $0.83 for every $1 earned by men. While the gender wage gap is gradually shrinking, the bottom line is that women must start saving and investing earlier than men in order to increase their chances of being successful. By starting earlier, women can take advantage of compounding interest, a powerful ally in any investor’s efforts to combat the long-term impact of lower wages.

For example, suppose you began investing $200 each month in an S&P 500 index fund, beginning at age 20. Over the course of a year, you would have invested $2,400. Let’s assume an average annual return rate of 10%.

By the time you reach age 40, you would have invested $48,000 ($2,400 x 20 years). However, with an annual return of 10%, your investment would be worth $137,460. That’s a growth rate of nearly 186% over 20 years.2

On the other hand, suppose you begin investing at age 30 and set aside $400 per month in the same S&P 500 index fund with the same average annual return of 10%. By the time you reach age 40, your investment would only be worth $76,499.64. Even though you contributed the exact same amount ($48,000), the power of compounding interest over time nearly doubled your retirement savings.

Women must plan for extended time out of the workforce.

Women are more likely than men to be out of the workforce for extended periods of time. Often, this is because they are caring for others, either young children or aging relatives. On average, women spend 44% of their adult lives out of the workforce, compared to 28% for men.3 Even just a few employment gaps can have a significant impact on a woman’s lifetime earnings.

It’s important to plan for time out of the workforce by implementing saving, investing and budgeting strategies to help cover periods of reduced income. Your wealth manager can work with you to implement a variety of strategies to help you prepare.

Women must plan for longer lifespans.

On average, women in the United States live five years longer than men.4 Consider what that means for a woman who is trying to save for retirement. If she intends to live on $80,000 per year, she’ll need access to $400,000 more than an average man.

Because of this, women’s savings, investing and retirement income planning strategies must be carefully designed and managed. A professional wealth manager can run projections based on various life expectancies to help ensure you’re prepared to live a comfortable lifestyle long into the future.

Women face higher healthcare expenses.

A recent study found that a 65-year-old single man retiring in 2022 can expect to spend an average of $150,000 in healthcare costs over the course of his retirement, while a single woman can expect to pay $165,000.5 This is, in part, due to women’s need for continued care over a longer lifespan, yet it highlights yet another reason why women must be more diligent and disciplined about saving and investing for the future.

Feeling overwhelmed? We can help. At Creative Planning, we help women navigate their unique financial challenges and achieve their long-term goals. We focus on providing you with the confidence and security of knowing that the actions you take today are setting you up for a secure financial future. For more information, schedule a call with a member of our team.


  1. https://www.pay-equity.org/day.html
  2. https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator
  3. https://www.ally.com/do-it-right/investing/should-women-invest-differently-than-men/
  4. https://www.health.harvard.edu/blog/why-men-often-die-earlier-than-women
  5. https://www.plansponsor.com/health-care-retirement-will-cost-average-315000

This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.


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