Why Women Should Invest Differently

Terri Spath |


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 invest with a partner. Most financial planners create investment strategies and plans based on some rote questions about life expectancy and risk tolerance. That's important. It's more than that.

We break down five investment strategies women should know when creating their financial planning approach.

Invest that Cash

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.

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, but when you are planning for retirement, diversification, effective asset allocation and risk management can help you get there. 

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 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. 

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 haven’t met 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 partner’s lives, the lifetime higher-earning spouse should delay claiming benefits if 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. 

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 two ways to do this, depending on where you are in your life and investing journey. First you must know your life expectancy, which depends on your date of birth. You can find yours here: https://www.ssa.gov/OACT/population/longevity.html


  1. If you’re still working, you will most      likely be doing most of your savings in an individual account, so matching      your investments to your life expectancy is straightforward. 
  2. 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. 

Health Savings Accounts

On average, women ages 18-44 spend $1,170 more on out-of-pocket health care per year than men do.2Almost 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 2022, 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.

The Bottom Line

Women have specific needs when it comes to creating a successful retirement plan, but it does not 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.


 Originally published October 2022

The information contained herein is intended to be used for educational purposes only and is not exhaustive. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation. This content not reviewed by FINRA.