Why a middle-class woman may end up less ready to retire than a middle-class man.
What is the
retirement outlook for the average fifty-something working woman? As a generalization, less
sunny than that of a man in her age group.
Most middle-class retirees get their
income from three sources. An influential 2016 National Institute on Retirement Security
study called them the “three-legged stool” of retirement. Social Security
provides some of that income, retirement account distributions some more, and
pensions complement those two sources for a fortunate few.1
For many retirees today, that
“three-legged stool” may appear broken or wobbly. Pension income may be
non-existent, and retirement accounts too small to provide sufficient financial
support. The problem is even more pronounced for women because of a few
factors.1
When it
comes to median earnings per gender, women earn 80% of what men make. The gender pay gap
actually varies depending on career choice, educational
level, work
experience, and job tenure, but it tends
to be greater among older workers.2
At the median salary level, this gap costs
women about $419,000 over a 40-year career. Earnings aside, there is also the
reality that women often spend fewer years in the workplace than men. They may
leave work to raise children or care for spouses or relatives. This means fewer
years of contributions to tax-favored retirement accounts and fewer years of
employment by which to determine Social Security income. In fact, the most
recent snapshot (2015) shows an average yearly Social Security benefit of
$18,000 for men and $14,184 for women. An average female Social Security
recipient receives 79% of what the average male Social Security recipient gets.2,3
How may you
plan to overcome this retirement gender gap? The clear answers are to invest and save
more, earlier in life, to make the catch-up contributions to retirement
accounts starting at age 50, to negotiate the pay you truly deserve at work all
your career, and even to work longer.
There are no easy answers here. They all
require initiative and dedication. Combine some or all of them with insight
from a financial professional, and you may find yourself closing the retirement
gender gap.
Taylor McClish may be reached at (503) 239-3060 or Taylor.McClish@cunamutual.com
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Citations.
1 - forbes.com/sites/karastiles/2017/11/01/heres-how-the-gender-gap-applies-to-retirement/
[11/1/17]
2 -
money.cnn.com/2017/04/04/pf/equal-pay-day-gender-pay-gap/index.html [4/4/17]
3 -
forbes.com/sites/ebauer/2018/03/16/how-should-we-make-social-security-fairer-for-moms/
[3/16/18]
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