Women Invest Differently

Investing should be personal – but there are some things that apply across groups of investors. Women, because of their longer life expectancy and increased health care costs, should tailor their plans to provide for their specific needs, whether they are individual investors or they invest with a partner. We break down five strategies that women investors should be aware of.

Match Your Risk Profile to Your Life Expectancy

Women have a longer life expectancy than men, according to the Social Security Administration.1 This means it’s important for women to match their risk profiles to their individual life expectancy, to minimize the potential problem of running out of money. Because they live longer, women may be able to take more risk at different stages in their journey. There are three ways to do this, depending on where you are in your life and investing journey.  First you have to know your life expectancy, which depends on your date of birth. You can find yours here: https://www.ssa.gov/OACT/population/longevity.html

  • If you’re still working, you’ll most likely be doing most of your savings in an individual account, so matching your investments to your life expectancy is straightforward.
  • If you’re married and already retired, depending on how you structured your retirement accounts, you may need to get more creative with your investment strategy. If you rolled your individual accounts into a joint account, setting aside some part of the total into separate buckets tailored to each of your life expectancies can make a lot of sense.

Spousal IRA

Women who stop full time work for any period before reaching retirement age don’t just end up with lower lifetime earnings – their retirement savings usually take a hit too.  However, if you’re married you can and should still continue to contribute to retirement savings if possible. A spousal IRA allows a working spouse to contribute to an IRA held in the name of a spouse with no or little income. Besides being able to continue to build retirement savings, it can also be a significant tax benefit.

Health Savings Accounts

On average, women ages 18-44 spend $1,170 more on out-of-pocket health care per year than men do.2 Almost 70% of women age 75 or older are widowed, divorced or never married, compared to about 30% of older men who live alone.3 This translates into women needing more paid long-term care than men do.

One solution? Health Savings Accounts. HSAs were created to be used alongside High Deductible Health Plans (HDHPs). (For 2021, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family).

They allow you to save and invest money to be used for medical expenses, including deductibles, co-insurance, prescriptions, vision expenses, and dental care. Unused balances are carried over to the following year, funds never expire, and they can be passed on to a surviving beneficiary. In addition, HSAs are “triple tax-advantaged”, meaning that they are funded with pre-tax dollars, they grow tax-free, and withdrawals are not taxed if they are spent on qualified medical expenses.


While there is a lot of conflicting data on differences between men and women in their preferred investment styles, one thing is clear – women tend to hold more cash than men do. Women on average hold 37% of assets in cash, compared to 25% for men.4 A money market fund should not be considered a long-term investment strategy for the bulk of your assets. There are a lot of ways to create an investment strategy that can provide long-term growth and still hew to a risk profile that is comfortable.  Money market funds have their place, for instance, to hold your emergency fund or an investment pot for a short-term goal. But when you’re making a plan for retirement, diversification and effective asset allocation can help you get there.

Claiming Social Security – Strategies to Maximize Your Benefits

For everyone, working past the early retirement age will boost your benefit. For women who have not contributed to social security consistently throughout their careers, it’s important to have a plan to catch up on contributions if you aren’t meeting the minimum number of 40 quarters of contributions.

If you’re married, you have some additional options to think about.  Since the goal is to maximize lifetime income over both partners lives, the lifetime higher earning spouse should delay claiming benefits as long as possible. Delaying retirement to add a few more years of earning is optimum, but if retirement is desired you may be able to access other sources of income to bridge the gap between retirement and claiming social security. For every month that you delay claiming benefits beyond your full retirement age, your benefit increases by a set percentage, up to age 70.

The Bottom Line

Women have specific needs when it comes to creating a successful retirement plan  – but it doesn’t have to be difficult or confusing to develop an investment strategy that takes them into account.  Understanding what tools are available to you, and either developing your own plan or working with a financial professional to deploy them can make sure your needs are met.

  1. Social Security Administration. Women and Retirement Security.
  2. U.S. Department of Health and Human Services MEPS data.
  3. AARP Public Policy Institute.
  4. Lynch, Kathy. Women Hold Too Much Cash, Study Says. Financial Advisor. January 22, 2015.

If you’d like an objective second opinion about your finances, please contact Michael Shea, a CERTIFIED FINANCIAL PLANNER™ and owner of True Equity Wealth Management LLC. Email him at michael.shea@trueequitywealth.com or fill out a contact form.

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This blog is provided for informational purposes only. Such views are subject to change at any point without notice. The information in the blog should not be considered investment or tax advice or a recommendation to buy or sell any types of securities. Some of our blogs or information therein have been obtained from third party sources believed to be reliable but such information is not guaranteed. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor’s financial situation or risk tolerance. No reliance should be placed on, and no guarantee should be assumed from, any such statements or forecasts when making any investment decision.

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