Although women in the US typically live more than five years longer than men do, they are much less prepared financially for their later years.
In a recent poll, 43% of women claimed they hadn’t started saving at all, compared to 29% of men, when asked how much people are now saving for retirement. In January, GOBankingRates conducted a national survey of 1,005 Individuals ages 18 and older.
According to general retirement guidelines, you should have saved two to three times your yearly salary by the time you are 40, and three to four times your income by the time you are 45. One million dollars is a common term for a broad overarching goal.
Only 2.4% of men and 1.5% of women in our study had saved $1 million for retirement. 25% of women and 29% of men had only saved $10,000 or less, whereas 5% of women and 9% of men had saved between $100,000 and $300,000. Let’s examine this pension savings comparison in more detail.
What causes women to lag behind?
One of the primary reasons why women don’t retire, according to Catherine Collinson, CEO and President of the TransAmerica Center for Retirement Research, is because they take care of others. “They are more likely to be housewives, caregivers, or stay-at-home mothers. Without a job and a source of income, a person is less likely to save and has less money available to save, according to Collinson. That is priceless, but without compensation.
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Women in the working population face numerous structural challenges when trying to save for retirement.
One is that 401(k) plans are typically only offered to full-time employees by companies, and women are more likely to work part-time. It can frequently be challenging for a woman to re-enter the workforce after taking time off to care for a kid or elderly family, according to Collinson.
Nearly 6 in 10 part-time workers are women, and part-timers are three times more likely to work in low-paying positions, according to the National Women’s Law Center. Women of color, who are disproportionately affected by barriers to better financial health in general, are significantly more likely to be employed in such jobs.
Many women, whether they work full- or part-time, don’t place a high priority on retirement savings. Only 18% of the women in our poll stated that saving for retirement was their top financial priority. After paying off debt (20%), it was stated that it met basic expenses (26%).
According to data from the TransAmerica Institute, women underperform men when it comes to 401(k) or other comparable plans that are provided by their employers (72% of women vs. 82% of males). Also, women make 10% less of their plan contributions than men do.
And it connects, according to Collinson, to the female pay discrepancy.
“From a general economic standpoint, the gender pay gap suggests that women have less income and less money available to save, and are less likely to obtain employer-sponsored retirement benefits,” she added.
The lack of emphasis on retirement planning is also attributed to the way women are brought up and held responsible for their financial decisions, according to Lauren Bringle, an accredited financial counselor at Yourself financially, which offers tools for establishing good credit.
Women are typically advised to cut back on their spending, save money, and create a budget. All of those are crucial, said Bringle. “But, contrast that with how guys are spoken to. They are advised to work harder, move out, make investments, and increase their savings. Both are accurate, but the lack of resources also compels women to view the world from the perspective of earning more money, especially when the issue of how women can save for retirement when they can’t even satisfy their basic necessities keeps popping up.
How do ladies get caught up?
According to Collinson, reducing the general gender wage gap and increasing access to retirement plans are just a couple of the structural and societal reforms that will be necessary to address the pension savings gap. But, it’s important for women to take charge of their own lives. To break down the taboos that keep women in the dark, she says this entails obtaining information, educating themselves, and having regular dialogues with their friends and family about money.
Many women lack self-assurance, but Collinson emphasized that they are intelligent and capable. They have the intelligence and creativity to come up with new ideas for money-saving strategies.
Bringle suggests that people start with a budget in order to get to a point where their essential needs are met and retirement can become their main priority. Without a budget, it can be simple to forget where you have room to reallocate some funds to savings or cuts, the expert warned.
That serves as a crucial frame of reference for figuring out whether you should cut back on expenses, increase your income, or possibly find a way to do both.
Don’t disregard the minor adjustments, Bringle said. “I think it may be quite intimidating, especially for women, so be ready to ask questions, find resources that can help you, and realize that you don’t have to do it perfectly. Over time, you can get significant benefits even if you consistently practice these little modifications.