Scary Statistics for Women in Retirement

Retiring can be particularly challenging for women today. Here are the top five reasons retirement is a challenge for women:

1) Two out of three working women earn less than $30,000 per year,

2) Nine out of ten working women earn less than $50,000,

3) Half of all women work in traditionally female, relatively low paying jobs without pensions,

4) Women retirees receive only half the average pension benefits that men receive, and

5) Women’s earnings average only $.76 for every $1 earned by men, which is a difference of $300,000 over a lifetime.¹

So why are women at risk of not being prepared? Unfortunately, in many instances it is simply a matter of relying on someone else to do it for them. Coupled with rising divorce rates and longer life expectancies than our male counterparts, this can mean financial devastation. In addition, women tend to be in and out of the workforce to care for children and aging parents.

These factors can lead to unfavorable consequences, such as not being able to retire when you would like. Many people plan to retire between the ages of 60 and 65, but not having an adequate nest egg can delay that to a much later date. Other consequences can be the risk of running out of income, being forced to go back to work or jeopardizing your standard of living.

Experts agree that early planning definitely gives you much more flexibility in terms of how much you need to save during your working years, when you can retire, how much income you can count on in your retirement years and how much risk you need to assume to meet those goals. In addition, early planning allows you to achieve the benefits of compounding, which is essentially letting your money work for you. For example, if you save $100 per pay for 20 years at 8%, your retirement savings would grow to nearly $110,000. These savings are significantly greater if you contribute to an employer-sponsored retirement plan since you are reducing your current taxable income. While future distributions will be subject to Federal Income Tax, the withdrawals avoid being subjected to other payroll taxes such as unemployment, social security, Medicare, etc. which means more money in your pocket. So don’t be afraid to start saving for retirement with even a small amount of money; the important thing is to just get started.

Retirement savings plans are available for just about anyone, including stay-at-home moms, self-employed persons, people whose employers don’t offer qualified plans and children who are old enough to earn a few dollars. Not having a viable option is no longer an excuse to not get started.

Women tend to put others’ needs and wants first, but when you are planning your retirement is not a time to feel guilty about doing something for yourself… in fact, you will likely regret it if you don’t! In the long run, you will find paying yourself first to be much more rewarding.

1.Source: wiser.heinz.org 3/27/06