Women have historically experienced a gender gap in retirement savings. While progress has been made in recent years to advance women personally, professionally, and financially, women are still more likely to experience financial insecurity in retirement. Unfortunately, the impacts of the coronavirus crisis threaten to widen this gap for a number of reasons.
It’s no secret that for every dollar a man makes, a woman makes 82 cents. Over time, this pay gap compounds, and the coronavirus crisis will only exacerbate this issue.
The careers of women are also, on average, interrupted more by parenthood than those of men. 41% of mothers say that being a working parent has made it harder to advance their careers, compared to just 20% of working fathers. COVID-19 has made this gap worse. Since the start of the pandemic, 40% of working mothers say they are spending an additional three or more hours a day on childcare and home responsibilities compared to 27% of fathers. 1 in 5 working mothers now say they are considering leaving the workforce, compared to only 11% of fathers. This is likely due to the amount of responsibility women face to prioritize household duties and responsibilities.
Additionally, women are more likely to take time out to take care of elderly parents. Two-thirds of elderly care is done by women. This, coupled with the increase in hours of home responsibility during the pandemic, is another reason many women may be considering taking on less responsibility at work or leaving the workforce completely.
Women experience a unique paradox in retirement.
On average, women will live 5 years longer than men, but retire two years earlier. It’s therefore imperative that they save more than men in order to make their retirement income last.
The cost of healthcare is also more expensive in retirement for women than men, as women typically pay $194,000 more than men in out-of-pocket healthcare as they age.
The expenses and increased amount of time women spend in retirement require them to have more retirement income than men. However, in many cases, this need isn’t being met. The challenges associated with balancing childcare, eldercare and their careers often mean women aren’t able to save the amount required to keep them comfortable in retirement. In these increasingly uncertain times, these challenges are even more prevalent.
While these obstacles make it harder for women to thrive in retirement, knowing the facts early can help you start to plan ahead. Every woman deserves to feel safe knowing they have a long, happy, and relaxing retirement waiting for them. We’ve compiled some options that, if incorporated into your retirement plan now, can help limit the impacts of the gender gap and these tumultuous times.
1. Consider your income options
Try to save as much as you can before you retire and plan a multitude of retirement income options. IRAs and employer plans like 401Ks and annuities are all doable options for your investments. You also should consider accounts where you pay taxes now and withdraw the money tax-free in the future like Roth IRAs and Roth 401ks.
2. Delay retirement
Another way to deal with the project income shortfall is to delay your retirement. Working and saving for longer can help you prepare for the increased time and expenses involved with retirement.
3. Investment options
Consider your risk tolerance and talk to your financial professional to create the right investment portfolio for you.
It may seem alarming that there are so many factors involved in retirement, but by knowing the risks, you are the one in the driver seat. You have the ability to avoid these pitfalls and set yourself up for a great retirement by planning ahead. We specialize in helping women retire comfortably. If you have any questions or would like to set up an appointment with us at Wealth to Women, call (716) 906-8121.
Women and Financial Wellness: Beyond the Bottom Line, Merrill Lynch, and New Wave Study. 2018