Women can experience more challenges saving for retirement than men, and unfortunately, COVID-19 has added even more challenges. According to Transamerica Center for Retirement Studies report Women and Retirement: Risks and Realities Amid COVID-19, women continue to be at risk of saving enough for retirement:
• 52% experienced impacts to their employment situation as a result of COVID-19.
• 24% of women have reduced work hours.
• 13% have experienced a salary reduction.
• 16% have been laid-off.
• 13% have furloughed.
On-going challenges that women face aside from COVID-19 include leaving the workforce to care for children or other family members, lower pay, and finding full-time employment. According to the same study, only 24% of women are very confident they can retire comfortably, compared with 20% of men. Here are several reasons why retirement is different for women than men.
Women usually earn less than their male counterparts.
Even though more women work more today in professional jobs than in the past, a gender pay gap still exists. The U.S. Census Bureau discovered that women earn about 75% less than their male counterparts. This discrepancy makes it more difficult for them to save for retirement.
Women spend less time in the workforce.
On average, women spend nine more years out of the workforce than men. Less time working reduces their overall lifetime earnings and retirement savings. Women often take time off from work so they can care for their children or other family members.
Women miss out on employer-sponsored retirement plans.
Since women are more likely to work part-time or contract positions to enjoy flexible schedules, they don’t always qualify to participate in employer-sponsored retirement plans or miss out on the company match.
Women have a longer life expectancy.
The life expectancy for women is generally greater than for men. Therefore, women require enough retirement savings to cover a longer time in retirement. Unless women plan and save appropriately, they risk premature depletion of their retirement assets and the possibility of living their retirement years in poverty.
Despite these challenges, women can thrive in retirement by implementing these tips:
1. Have a Backup Plan: Circumstances like divorce, death, or injury can prevent retiring as planned. For this reason, having an emergency savings account, life insurance, disability insurance, a set budget, and a plan to reduce your expenses can help.
2. Participate in Your Employer-sponsored Retirement Plan: If you work for an employer who offers a retirement plan, take advantage of it. Save enough to ensure you receive the employer’s matching contributions.
3. Save as Much as Possible in other types of retirement savings vehicles: The more you save at an earlier age, the better prepared you’ll be for retirement. If you take some time off from full-time employment, continue part-time or perform contract work and continue to save for retirement.
4. Consult Your Financial Professional If you’re a woman planning for your retirement, your financial professional can review your financial situation and develop a retirement strategy appropriate for you.
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