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Here are the Most Difficult Retirement Challenges Women Face

retirement challenges

While planning for retirement is important for everyone, women have unique circumstances that make their retirement needs different than men’s. Socioeconomic factors create additional strains for women that have direct impacts on our retirement income streams. Women are stuck in a catch-22: on average, we must save more than men for retirement, but we also earn less, which means we have to save that much more while working.  Women should take the following retirement challenges into consideration when planning for their retirement.

1. The Gender Pay Gap

While the gender pay gap has been narrowing slightly since 1980, women still only make 82% of what men earn. According to a Pew Research study, it would take women an addition 47 days of work to earn what their male counterparts did in 2017. Because Social Security income is based on income earned during working years, the pay gap has a significant long-term effect on retirement security. In addition, the pay gap is reflected in 401(k)-type accounts, with women having less accumulated savings overall.

2. Women Perform Unpaid Care Work

Women are far more likely than men to take extended time off of work to be caregivers for children or family members. As a result, we miss out on retirement contributions (as well as employer-matched contributions) and promotions. After the birth of a child, fathers generally take a much shorter parental leave and then go back to work full-time, so it’s easier for them to make up for any financial hits that they incur while on leave. It’s much harder for women to make up for that lost time and earnings when we return to work.

3. Life Expectancy

On average, women live longer than men, which means increased expenses during retirement. Besides the average cost of living expenses, women should expect to have higher medical costs as we age.

4. Women of Color are Disproportionately Affected

Minority women are even more negatively affected by socioeconomic factors. While white women earn, on average, 80 cents to the man’s dollar, Black women only earn 63 cents. Latinas receive only 54 cents for every dollar. This significant disparity makes it that much more difficult for women of color to be able to contribute to retirement accounts, and will also negatively affect employer-matched contributions and Social Security.

5. Women Retire Earlier than Men

Generally, women retire earlier than men. In a man-woman partnership where the man is a few years older than the woman, the female partner tends to retire at the same time as her husband. So not only do women live longer than men, but since they retire sooner, they have to make sure that they save enough to account for those additional years.

Because our life expectancy is longer than men, women need to save more for retirement. These savings must cover basic costs of living, plus medical expenses. Because of the gender pay gap and unpaid care work we traditionally perform, women are at a disadvantage. It’s crucial that women start saving for retirement as early as possible, and contribute to those accounts as much and as often as we can.

What other retirement challenges do you think women face? Share with us in the comments below!

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