It’s unsurprising that there is a direct correlation between the gender wage gap and the gender retirement gap among Americans.
The three-legged stool made up of a pension, social security, and personal retirement savings is severely uneven between men and women.
According to the National Institute on Retirement Security, women are 80 percent more likely than men to be impoverished at the age of 65 or older. The institute lists three major components that contribute to the disparity in retirement funds between women and men.
The first is the wage gap. With women earning 79 cents for every dollar a man earns, achieving the same level of savings for retirement is still a steep hill to climb. Experts predict that the gap won’t close until 2059. For Latina and African American women, the disparity for every dollar a man makes is 55 cents and 60 cents, respectively.
In a survey conducted by the Transamerica Center for Retirement Studies (TCRS), 62 percent of men considered retirement savings as their greatest financial priority. In contrast, 51 percent of women reported that their main priority was covering basic living expenses.
In a similar survey, 61 percent of millennial women reported that their finances were stretched too thin to contribute to retirement plans.
The shortage in finances that women use to cover those basic living expenses could also be chalked up to the second cause for the pension gap: women are more likely to work part-time jobs.
A Teachers Insurance and Annuity Association (TIAA) study found that two college graduates – one male and one female – starting in the same position for the same company with the same starting salary would still have a significant difference in their retirement savings. The study found that in order for the man and woman to save the equal amount of money, the woman would need to save 18 percent in comparison to the man’s 10 percent.
Interestingly, a 2016 Pew Research report states Americans aged 65 or older were working more than ever. Nearly nine million people reported being full or part-time compared to the four million people in 2000. Yet despite those numbers, a majority of women will have a significantly less amount of money in their pension compared to their male counterparts.
The third reason the institute lists for the savings gap is that women face different obstacles throughout their lives that men don’t typically have to deal with.
Women take time off to focus on many factors such as child care, elder care, or health reasons. Men are reported to work an average of 38 years in their lifetime while women work only an average of 29, according to this TIAA study.
Factoring those three main causes for the gap in retirement savings among men and women, Collinson suggests four tips to help women increase the amount of savings they accrue. First, women should contribute to an employer retirement plan if available. Second, they should set the employer plan to deduct automatically from payroll for the largest amount they can spare. Third, they should use a free web calculator to estimate retirement savings. And lastly, Collinson advises that women should learn more about investing in retirement.
With the help of these four tips and awareness about retirement plans, we can only hope that the retirement gender gap will decrease as time goes on.
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