We all are aware of the gender wage gap, but have you heard of the gender retirement gap?
TIAA states that there are 5 big challenges that stand in the way of securing a safe retirement.
- Fewer Working years: Women average about 29 years in the workforce compared to 38 years for men. The difference is due to time taken off for Children and in some cases, care for elderly parents. Thus, a greater percentage of salary must be saved by women during their working years to account for the years when no saving contributions are made.
- Lower pay: In 2015, Professional women earned 28% less than professional men. The lower pay restricts the ability to save more. If you find yourself in situations where you can squirrel more away- you should. Saving up to the annual maximum limits of retirement accounts and contributing more money to supplemental vehicles will help offset non-working years when no new contributions to savings are made.
- Greater Risk Aversion: Women tend to maintain higher cash allocations and lower stock and mutual fund allocations than men do. These more conservative allocations compound the problems caused by fewer years by reducing the rate at which savings grow.
- Longer Lifespans: Women age 65 outlive men of a similar age by 2.5 years. This difference overshadows the fact that on average, husbands are 2.1 years older than their wives. In situations where the wife outlives her husband, social security administration data shows women living an additional 11.5 years following the death of their spouses. During this period, housing costs are not shared and the extra income from a spouse is lost.
- Health Care costs are higher: The department of Health and Human Services projects that women will spend $19,558 on health care once the turn 65 v $18,251 for men. If an employer offers a lifetime plan such as an annuity, women should consider it. The unisex life expectancy tables employers are required to use result in women receiving more income per dollar than they would find by purchasing a contract on the open market.
Hope these tips help! As always, Just Call Jack for any questions and tax help you may need.