While a women-led revolution plays out in the American workplace, the retirement landscape is still evolving.
In the second half of the 20th Century, women’s participation in the workforce rose from 29.6 percent to 46.5 percent.1Among those age 25 to 34, during that time, participation doubled.2Today, women continue to make up nearly half (46.8 percent) of the workforce in the United States,1own more than 12 million businesses3and are the sole or primary breadwinners for 42 percent of families with children under 18.4
Despite this workplace sea-change, women face a reality different from their counterparts in life after work. Below we take a look at three key factors defining this disparity and consider a few financial measures that can help align retirement lifestyle differences.
Factor 1: Gender Gap in Retirement
Women often face bigger challenges in retirement because of leaving the workforce to raise children or care for elderly relatives. A recent Bank of America/Merrill Lynch and Age Wave study found 54 percent of women surveyed took a leave of absence after becoming a parent, compared with 42 percent of men. This often leads to fewer years contributing to an employer-sponsored retirement account.5
Further exacerbating this situation is a gender pay gap rooted in the years when the vast majority of women have children: late 20s to mid-30s. According to the National Bureau of Economic Research, between ages 25 and 45, the gender pay gap for college graduates, which starts close to zero, widens by more than 50 percent before narrowing again as we near retirement.6
The National Institute on Retirement Security reports that women age 65 and older typically make 25 percent less than men. Women are 80 percent more likely than men to be impoverished at age 65, while women 75 to 79 are three times more likely than men to be living in poverty.7
Factor 2: Longevity
According to HealthView Services, a health care cost projection firm, a healthy 30-year old woman is projected to spend $118,632 more than a healthy 30 year-old man to cover health care costs during their lives. This is due, in part, to longevity where higher health care costs are incurred in the final four years of life.8
A man reaching age 65 today can expect to live, on average, until age 84.3. A woman turning age 65 today can expect to live on average until 86.6. Moreover, about one out of every four 65-year-olds (male and female) today will live past age 90, and one out of every 10 (male and female) will live past age 95.9
Factor 3: Priorities
In 2018, Willis Towers Watson, a leading global advisory and brokerage company, reported that women are less likely than men to rank saving for retirement at the top of their financial priorities. Instead, women place general costs, paying off debts and housing costs as a higher priority.10
The disparity may stem from division of labor at home: married women without children most often named saving for retirement as a top financial priority. This schism can wreak havoc on long-term planning as married and unmarried women age into retirement.10
Securing Financial Stability in Retirement
There is light at the end of the tunnel. A host of financial measures, resources and options are available to help address the factors burdening tomorrow’s retirement incomeOpens a New Window..
Closing the gap
Joining and contributing to employer-sponsored retirement plans while taking full advantage of matching programs can be a path to catching up on lost time or income. Additional safe-money options are available for alternative income solutions that offer tax deferral, without contribution limits, and allow for expedited nest egg growth.
Lifelong income for longer living
Focusing on health and wellbeing to cut down on future health care costs can have long-term physical and financial benefits. For added longevity stability, a variety of retirement insurance products are available that are specifically designed to ensure guaranteed income for life, which may also offer increased liquidity options for some health-related expenses.
Balancing a portfolio with various asset allocations can help with short and long-term financial goals. Whether looking to secure income for the day to day with lifetime income products, or grow assets with an accumulation-focused strategy, a comprehensive approach to retirement is paramount.
Retirement goalsOpens a New Window. and needs vary person to person and plan to plan. If looking for guidance, consider working with a licensed financial professional for more information on long-term solutions.
- Footnote1United States Department of Labor, Women’s Bureau, Civilian labor force by sex, 1948-2016 annual averages↩↩
- Footnote2United States Department of Labor, Women’s Bureau, Labor force participation rate of women by age, 1948-2016 annual averages↩
- Footnote3“2018 State of Women-Owned Businesses Report,” Commissioned by American Express. 2018↩
- Footnote4Center for American Progress, “Breadwinning Mothers Are Increasingly the U.S. Norm,” by Sarah Jane Glynn. 2016↩
- Footnote5Bank of America/Merill Lynch and Age Wave, “Finances in Retirement: New Challenges, New Solutions,” 2017↩
- Footnote6National Bureau of Economic Research, “The Dynamics of Gender Earnings Differentials: Evidence from Establishment Data” 2017 (Using Census Bureau databases, 1995 to 2018)↩
- Footnote7National Institute on Retirement Security, “Shortchanged in Retirement.” 2016↩
- Footnote8HealthView Services, “The High Cost of Living Longer: Women and Retirement Health Care,” 2016↩
- Footnote9United States Social Security Administration, 2018↩
- Footnote10Willis Towers Watson, U.S. insights from 2017/2018 Global Benefits Attitude Survey. “Infographic: Workers look to employers for security as retirement confidence drops” 2018↩↩
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