Forget the Gender Wage Gap! The Retirement Gap Gets Even Worse

The wage disparity is affecting women in countless ways all across various professional sectors, however, this is even more prevalent as both women and men reach the brink of retirement. ‘AAUW found that the gender pay gap persists – and in fact, widens precipitously – long after leaving the workforce. The typical woman’s total retirement income equals just 70% of the typical man’s. That includes Social Security benefits, pension plans, savings, and any other source of income.’

Women are afraid of their financial future; it keeps them up at night

In the US alone, there are many benefits that come with Social Security and if they are married they even receive the benefits of their spouse and because women earn less than men and therefore, they contribute less to this and hence get few benefits. Lori Trawinski, director of banking and finance for the financial security team at the AARP Public Policy Institute, said, “America’s population is aging overall, and to the extent that we have people who do not have the means to live comfortably in retirement, especially as the period of retirement is lengthening, it does suggest that something needs to change in our planning for the future.” Today many women are fearing their financial future and it is one of the biggest things that keep them awake at night, the loss of their spouse is another cause for them to worry. Women are finding it harder to save up for their retirement because they are also taking more career breaks than men and therefore, get paid less overall. 

Women tend to live longer than men which means they take early retirement to become a caregiver

Moreover, there are a lot of other reasons why women are losing out when it comes to their retirement because there are more financial expenditures like health costs, divorce and a high standard of living that demands more from their bank accounts. Also, women tend to live longer than men which mean that oftentimes women have to take early retirement to look after an ill spouse or a family member and women also are marrying later and delaying children. ‘Just as they hit their peak earning years, and the age when they can make extra retirement plan contributions, they may be confronted with both eldercare needs and children’s college tuitions,’ said Katherine Roy, chief retirement strategist at JP Morgan Asset Management. On the other hand, many financial advisors reveal that most parents don’t pass on good habits to their children particularly when it comes to negotiating salaries and saving for their retirement and hence, they aren’t as confident with money as they grow older.

Image credit: FMC – CFS – CUSO Financial Services

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