What is the Financial Outlook for Women Planning for Retirement?
The wage and wealth gap are both factors that influence women in retirement. They create a retirement savings gap that is more pronounced for women than for men. A recent BlackRock study shows 59% of women versus 78% of men said they felt they were unsure how on track for retirement they are.
The most recent U.S. Census Bureau data on retirement savings also confirms that women are more likely than men to not have retirement savings.
This is driven in large part by several key factors.
Women in Retirement Factors: Longevity
Department of Labor statistics show, on average, a female retiring at age 65 can expect to live another 21 years — nearly three years longer than a man the same age. This amplifies the importance of having retirement savings to sustain enough retirement income to cover basic living costs.
The Secure Retirement Institute marks longevity as a considerable risk in retirement, with women living roughly a decade longer on average, leading to an increased likelihood of outliving their spouses.
Women in Retirement Factors: Caregiving
Women are disproportionally involved in caregiving across multiple age ranges. U.S. women ages 55 and older are providing 26.6 million hours of unpaid care to family and friends on a daily basis. This often results in a critical impact on the hours they can work resulting in lost wages and, in turn, lower retirement income.
Data from the National Partnership for Women and Families also shows a discrepancy in retirement income planning based on maternity leave and child care. Retirement plans were especially likely to be off-track in households where someone has been recently out of work due to child care or family obligations.
Women in Retirement Factors: Gender Gap
While these external factors are all important contributors to some of the challenges women face when planning for lifetime income sources in retirement, the gender gap is likely the most prevalent difference in retirement outcomes between men and women.
2023 Census Bureau data shows "women workers make just 78 cents for every dollar that men make." This results in an approximate pay gap of $1.6 trillion a year.These numbers, combined with the factors above, result in women having less money to save overall but especially for retirement. Women report feeling more insecure about their financials in retirement, harder to cope with financial loses and expect their assets to decrease.
Tips for Closing the Gap
Women can focus on closing this income gap by joining and contributing to employer-sponsored retirement plans. They can also take full advantage of matching programs, which can be a path to catching up on lost time or income. Additional stable-money options are available for alternative income solutions that offer tax deferral, without contribution limits and allow for expedited nest egg growth potential.
Here are five helpful ways women can start to save more for retirement.
1. Get started, even if it is a small step. The earlier you start to plan for retirement, the better off you will likely be.
2. Take the time to do your research and find the retirement income options that are right for your individual needs.
3. Plan out your budget, including building or automating savings into it.
4. People are living longer. Calculate what you might need for potentially 30 years in retirement.
5. Money and retirement income don’t have to be taboos that women are afraid to talk about. Your long-term financial health is important and should be openly discussed, whether it’s with a financial professional, spouse, family member or trusted friend.
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