Retirement Savings Disparities: The Challenges Women Face
Did you know that only about 27% of women look forward to retirement according to some surveys? Due to factors like inflation, housing prices, and tax policies, the average woman has about $50,000 in retirement savings compared to $157,000 for the average man. That’s only about 1/3 of what their male counterparts are managing to save. This gap begs us to ask the question: Why is that? Well, there are a number of variables that heavily influence this.
1) Life expectancy. Generally, women having lower rates of life threatening diseases such as heart disease, as well as smoking and consuming alcohol less, directly impacts them living longer than men (by about 5-6 years). This extension requires women to have more savings than men to cover retirement expenses.
2) The gender pay gap. In America, women earn about 82 cents for every dollar earned by men across all occupations. Earning less than men on average over their career lifetime causes women to have lower lifetime earnings. Thus, they are able to contribute less to retirement accounts, like 401(k)s or pensions. Additionally, women are more apt to work part time or in fields that pay lower wages. This means they are less likely to have access to employer-sponsored retirement plans or other benefits and opportunities to accumulate wealth.
3) Family. Due to societal expectations and norms, women are 3x more likely to focus on family and children than saving. Prioritizing immediate family needs over investing in long-term higher risk financial instruments, directly contributes to women being more vulnerable to economic instability during retirement. Breaks from the workforce for purposes such as caregiving or maternity leave, means fewer opportunities to contribute to retirement plans as salary is usually adjusted or halted during these breaks.
Solutions to help close the retirement gap between men and women are:
Start saving as early as possible
Take advantage pf employer sponsored retirement plans
Address the pay gap by advocating for equal pay and salary increases.
And of course, you can always contact us at Simmons Capital Group at 518-406-5624 for a free consultation for all your retirement needs.