As a woman and a mom, this is a topic near to my heart. The process of saving for our retirement years is always complex and should start early for everyone. But when discussing one’s financial plans and saving enough, it is usually a more challenging process for women.
As we think about and plan for retirement, we must acknowledge these challenges — that way we can educate and empower ourselves to come up with the best possible plan. Let’s start with 6 facts about women facing retirement that every family group should be aware of:
Women make a lot less than men. Yes! Still!
The gender gap between workers continues to widen, despite serious UN efforts to close it by 2030. According to U.S. Census Bureau, women still make 83 cents for every dollar men would earn, and almost half a million of income is lost out when retiring. Social Security checks are also affected by this. In 2019, women were only receiving an annual average of $13,505, which is 22% percent less than men of the same age. Bottom line, having worked the same number of hours we’ll be retiring with a lot less to live with.
Women retire for a longer time.
A UN report published a few years ago stated that women live longer than men anywhere in the world mainly because of being less exposed to leading causes of death and a more positive attitude towards health care. According to the National Library of Medicine, a woman’s heart rate increases during the menstrual cycle — offering similar cardio benefits to doing exercise. An American woman’s life expectancy is around the age of 86, according to the Board Of Trustees of the Federal Age’s 2020 Annual Report. That means they’ll be retired for 21 years, which is 3 years more than men.
Women Mostly Take Part-Time jobs.
According to a report from a labor review report from the US Bureau of Labor published in 2016, 1 to 5 women were working in part-time jobs for noneconomic reasons. Although that trend has luckily been trending upwards, it is a fact that fewer and fewer part-time jobs are likely to offer retirement plans; or even sponsoring for one.
Women are likely to have fewer retirement savings.
Whether we marry or we have children can have an impact on our retirement finances, according to a United Nations report in 2022. 50% of women aging 55 to 66 have no personal retirement savings, compared to 47% of men. A larger percentage of women without children have at least $100,000 in retirement savings compared to women with children, with single or multiple partners.
Poor financial advice.
While we tend to exhibit lower risk tolerance levels, our investment choices might have been further influenced or even limited by gender stereotypes demonstrated by investment advisors, who had overestimated men’s risk tolerance and underestimated ours, according to a report by Taylor & Francis. At the same time, according to our Government’s Accountability office, older women in 2020 have shown regret about not having looked for financial education about their retirement plans. “Instead of putting 50 cents, I should have been putting a dollar”, a woman said. These will be women retiring at the end of this decade. We can’t make the same mistake.
Women take more time off to care for others.
Leaving our workforce all of a sudden to take care of our kids when something suddenly comes up at school, or when having to take care of a sick family member can have a financial impact on working benefits, health insurance, and even loss of income (after dismissal). And women see themselves forced to take almost 40% more than men. This means — women taking more time off to help others in the family but jeopardizing their future (not to mention they end up a lot more stressed every day). Eventually, they end up looking for more flexible jobs with lower pay.
Yes! It’s late to fix some things we didn’t take care of before. We can’t go back in time and fix them. No! It wasn’t wrong to prioritize our families’ needs, but it’s time to change your budgeting mindset. Don’t think of saving as budgeting or penny-pinching, but as paying your future self. Get in the habit of saving at least 20% of every paycheck. Once you have saved a few months’ worth of living expenses in an emergency fund, set up an automatic transfer to divert a chunk of your paycheck into an investment account. The best time to start saving for your future is Yesterday, and the next best one is Today.
Keywords: Women plans, Financial planning services, woman milestone, Elle Kaplan, LexION Capital.
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If you find this blog helpful, please feel free to leave a comment or reach out to me via Twitter. Should you need help in the aspect of financial growth, please visit my company’s website, LexION Capital
Elle Kaplan is the founder and CEO of LexION Capital, a fiduciary wealth management firm in New York City serving everyone who feels left out by traditional “Wall Street”, including women and the families they love (vs high net worth individuals).