According to a survey conducted by Allianz Life Insurance of North America, Americans believe a retirement crisis exists and that they are unprepared.1 The study shows that Americans fear outliving their money more than they fear death.
The concerns of lack of preparation for retirement are even more significant for women. Poverty rates for those older than 80 increase much more significantly for women than for men.2 Several factors are driving gender inequality in retirement. Consulting with a financial professional who understands these issues may help women develop a retirement strategy.
Average lifetime earnings for women are significantly lower than they are for men. According to U.S. Census figures, women receive about 83% of what their male counterparts earn.3 These lower earnings hurt women in two ways during retirement. First, having lower earnings means that women may save less for retirement than men. Secondly, because Social Security uses a percentage of the 35 highest-earning years of someone's career to determine benefits, lower earnings means lower Social Security payments.4 In companies with traditionally defined pension plans, the calculation of retirement benefits are also based on earnings.5
Women are more likely to work part-time than men.6 Working part-time versus full-time affects retirement income in two ways. The first is the inability to participate in an employer's retirement program. Only one-third of employers offer retirement benefits to part-time workers.7 The second is that part-time work pays less than full-time work, meaning that when women participate, their contributions or salary basis for benefits is less.
Fewer Years in the Workforce
Another key to building retirement assets is the number of working years and the tenure in each job. As a general rule, women also work fewer years for pay than men do and often work as unpaid caregivers.8
Women tend to live longer than men, which means their retirement assets must last longer. A longer life span also typically means more health care expenses. According to The Employee Benefit Research Institute, a 65-year-old man needs $79,000 in savings. In contrast, a 65-year-old woman needs $104,000 if they both want a 50% chance of having sufficient savings to cover health care expenses in retirement.9
Income in Retirement
Finally, women who take retirement jobs tend to earn less than men. During the second quarter of 2021, for example, women over age 65 earned only about 72% of the income of men older than 65.10
To Sum Up
Women face significant challenges in acquiring sufficient retirement assets. They tend to work fewer hours and fewer years and in lower-paying jobs. They also tend to live longer. With these challenges in mind, a financial professional who understands these issues may help women develop a strategy to maximize their retirement income.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
LPL Tracking # 1-05296605.
1 Reclaiming the Future Study, Allianz Life Insurance of North America,
2 Still Shortchanged: An Update on Women's Retirement Perspectives, National Institute on Retirement Security, https://www.nirsonline.org/wp-content/uploads/2020/04/Still-Shortchanged-Final.pdf
3 Income and Poverty in the United States: 2020, Table A6, United States Census Bureau,
4 Learn About Retirement Benefits, Social Security Administration,
5 The Gender Gap Persists, National Committee to Preserve Social Security & Medicare
6 Labor Force Statistics from the Current Population Survey, U.S. Bureau of Labor Statistics,
7 Who's In, Who's Out, The Pew Charitable Trusts,
8 Caregiving in the U.S., The National Alliance for Caregiving,
9 Retirement Confidence Survey, Employee Benefit Research Institute,
10 Earnings and the Gender Wage Gap, Institute for Women’s Policy Research,