Women are making great strides in closing many gender gaps, but several still exist, including, how much women are saving for retirement and the concern they have for their financial futures.

The RBC Wealth Management 2017 Wealth Transfer Report: Lasting Legacy suggests high-net-worth women feel less secure about their future finances than their male counterparts. Nearly a third (27 percent) of high-net-worth female respondents indicated they don't feel they have enough wealth to give it away gradually as they age, compared to only 18 percent of male respondents. The report surveyed 1,752 high-net-worth females, each worth $4.4 million on average, across the United States, Canada and the United Kingdom.

The retirement savings gap is a reality, says Angie O'Leary, head of wealth planning at RBC Wealth Management. While women are actively saving more of their income, several factors affect the actual savings they can accumulate by the time they retire, causing them to feel unprepared to meet the long-term costs of retirement.

Addressing the gaps

"Yes, the gap is closing, but women still make less (on average) than men, therefore build up less in retirement savings and Social Security benefits," says O'Leary.

"Women in their late 20s and 30s are accelerating wage increases and inching closer to parity with their male colleagues. Now earning 79 cents on the dollar (up from 68 cents in 1985), women have more income to control, spend and save."

And while women are making more, the nature of their work is different. A 2016 report from Pew Charitable Trusts entitled "Who's In, Who's Out," examined employer-based retirement plans and participation rates between men and women. The report found access and participation in the U.S. are now equal across gender lines; however, among employed women, “26.5 percent reported usually working part time, around twice the rate for men." Typically part-time workers do not have access to retirement savings programs offered by employers.

The single life

Single women are now outnumbering married women, with 37 percent of American women aged 65 and over living alone, compared to 13 percent of men. According to the U.S. National Center for Health Statistics, women live an average of five years longer than men. Consequentially, their money has to last longer too.

"As women become increasingly single," says O'Leary, "they don't have the same economic benefit of shared household expenses and shared investments."

So what can women do to close the retirement savings gap?

1. Find ways to accelerate savings

While saving early is always a great mantra to follow, what happens if you're 45 and that, "saving-early" window is already behind you? O'Leary recommends considering a Roth 401k or IRA, which provide tax deferred savings and tax free withdrawals.

"These are different from the traditional IRA or 401(k), which provide tax-free favored contributions and deferrals, but provide taxable income upon withdrawal. For those individuals that can forego the current tax advantage of a 401(k) or IRA, the long-term benefits of a Roth are an advantage. Many of the late Boomers, like me, have all of their retirement savings in a traditional 401(k). That means every dollar withdrawn will be taxable. That is typically a 20 - 30 percent reduction in savings that simply goes to taxes."

While there are some income limits to a Roth account, she says, it's certainly worth considering for at least a portion of retirement savings.

O'Leary also suggests accelerating savings at age 50+, once major expenses such as a child's college tuition are behind you. "These are peak earning years with fewer expenses. We need to take advantage of them."

2. Think long-term

It's important to think long-term, says O'Leary, and not just into the first few years of retirement. Women need to create a plan extending well into their later years.

O'Leary has two suggestions for long-term saving and investing. The first is married women should take an active role in their family's finances, and insist on meeting with the family financial advisor at least annually.

The second is to have a comprehensive wealth management plan that addresses the key risks in retirement and a plan to mitigate these risks. According to the 2017 Wealth Transfer Report, when it came to their future finances, only 22 percent of women surveyed said they had a full wealth transfer strategy in place, versus 30 percent of men.

"The right wealth planning tools can help clients better understand how to make their resources last," says O'Leary. Understanding options and the impact of living longer can be critical to a successful retirement.

3. Plan for future healthcare costs

"I suggest clients think about how they are going to fund their healthcare costs, especially a long-term care event," says O'Leary. "There are really just a few options, and it's important to consider the pros and cons of each of them."

Between personal savings, spending down assets, depending on family, or relying on insurance and Medicare, the right option isn't always obvious. This is where speaking with a wealth planning professional really becomes a critical step.

One additional way to prepare for the future costs of long-term care is to save in a Health Spending Account (HSA) plan — an individual savings account associated with a high-deductible health insurance plan.

"A Health Spending Account is a great way to accumulate and save for healthcare in retirement. It has a triple tax benefit: You contribute with pre-tax dollars which reduces your current income, it grows tax deferred, and when used for qualified healthcare expenses, it is tax free." Adds O'Leary, "If you can afford to cash flow your current healthcare expenses and let your HSA contributions accumulate and grow, it provides a great way to fund healthcare in retirement."

When it comes to their future finances, will women eventually save as much as men? "That's a tough one," says O'Leary. "The hope is the gap will continue to narrow, but until there is gender parity across many factors (pay, promotions, caregiving support), there will likely continue to be a gap."

In the end, it will come down to planning — planning for the extra years AND the related expenses women tend to have in retirement. "There are some things that are beyond our control. So to close the gap, we need to appropriately manage the factors that are within our reach."

RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.

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