Staying home to raise kids has retirement repercussions, study finds

Women should ensure spouse's wealth is aligned to long-term goals of both, says Schwab Wealth Advisory director.

Women who put their careers on pause are more than twice as likely than men who do the same to go back to work after retirement.

That’s according to data Friday from Charles Schwab, based on a June survey of 1,000 U.S. residents ages 22 to 88 with $50,000 to $5 million in assets about their retirement preparation and outcomes.

The data highlight that women may more often face specific hurdles around retirement, despite being more involved with finances and investing now than they have been historically.

While 14% of men who take time away from their careers end up having to go back to work after retiring, that compares to 30% of women, the survey found. Of those who put their careers on pause, 70% of women said it for parental leave, compared with just 6% for men. Thirty-seven percent of women also indicated it was necessary to provide child care, while only 4% of men said the same. Women were also nearly twice as likely to take time away from work because of health issues, at 23%, compared with 12% of men.

People who took time away from work were more likely to have started saving for retirement in their 30s (39%) than those who didn’t (27%).

Having a plan in place well ahead of time can help those who anticipate needing to take extended periods away from jobs, said Susan Hirshman, director of wealth management for Schwab Wealth Advisory and the Schwab Center for Financial Research. And meeting with an advisor is important for a reason people in the business know all too well — that one-size-fits-all planning is far from ideal.

“What we always like to share with people is that what’s good for your neighbor is not necessarily right for you,” Hirshman said. “People have different goals, lifestyles and savings habits. And those things come into play.”

For women, especially those who stop working to raise kids, it’s critical to become involved in financial planning, she said.

“The No. 1 thing is what I call being an active participant in your wealth,” she said. “Really consider that the wealth that’s being earning through your spouse is part yours as well. And you have a responsibility to make sure the investments and the savings are aligned to the goals of both of you.”

That means being a part of the planning conversation to address life expectancy and risk capacity, among other factors.

Work satisfaction is also something to consider. Although the survey found that nearly a third of people who unretire go back to the same jobs of fields, often part time, some of the top reasons for going back to work are unrelated to income: engagement, purpose and boredom.

“There comes a point where they’re playing pickleball five times a week, and it gets old,” Hirshman said. “It really depends on what you need to feel fulfilled.”

TAKING CHARGE

“What I’m seeing overall, particularly with my female clients, whether they’re single or married, is just overwhelmingly, women are becoming more involved in their finances,” said Alexis Zuccaro, wealth advisor at SageView Advisory Group.

“When they’re career-minded, they’re planning for that career and the family they want to have along with that career,” she said. “The next logical step has been working with a financial advisor much earlier than they had historically.”

For younger workers, one of the best steps is contributing what they can to a 401(k) — at least enough to get the full employer match — along with having emergency savings sufficient to cover six months of living expenses, Zuccaro said. Ratcheting up 401(k) contributions when they get raises is also important.

When returning to work after a period of absence, it may be necessary to dial in their “needs and wants to compensate for lost savings,” she said.

It’s common for advisors to be willing to have consultations with people well before they have enough assets to become clients, Zuccaro noted.

“Some people think they need to have a whole bunch of money stashed aside to talk with a professional,” she said. “Never be afraid to reach out.”