Money Matters – Women & Money: Retirement Income Gap
BOSTON (CBS) – We talked about the income gap yesterday. The income gap is a scary realty and I hope by the time our granddaughters are working their pay will be equal to their male co-workers. I once had those hopes for their mothers, our daughters, but it did not happen.
But more frightening to me is the retirement income gap that retirees face. Currently it is 44 cents for women for every $1 that men will collect. It’s been well reported that more women than men encounter financial hardship during retirement.
Women outlive men usually by six years on average, they are in and out of the job market raising children or caring for elders. Over 5 million women are sandwiched between those very jobs right now caring for children or grandchildren and elderly relatives. Women over the age of 25 change jobs every 4.8 years as compared with 6.6 years for men. To be vested in a pension plan you usually need to have worked for a company for 5 years. Currently 33% of female workers have pensions compared to 55% of men.
And when women are working they often put off participating in their employer’s retirement plan because of the immediate needs of their family. Divorce and early widowhood also play into this lack of retirement savings. Average age of widowhood is 56 and the divorce rate is still 50%.
Certainly Social Security will be there for many women if they or their spouses have paid into the system, but Social Security was never meant to be your sole source of income in retirement. And with the average benefit for women currently about $900 a month that is barely enough to exist on.
A recent study from the Transamerica Center for Retirement Studies found that more than half of the women surveyed did not have a retirement strategy and even more 60% guessed at what their retirement needs would be. And most wanted more education about retirement planning.
Women need to plan for more years in retirement and they need to be saving more for their retirement. A comfortable retirement should be their number one goal and they should have on blinders when it comes to reaching that goal. The earlier they start saving the longer their dollars will be working for them.
No excuses here and I have heard them all. “I will wait till I get married, after we buy a house, after the children are grown. It’s too late so why bother” is something I also hear. With your first job, start saving. And it is never too late to start saving for retirement. Anything you put away now will grow in the future and allow you choices as you near retirement.