Lower pay, fewer promotions and career breaks for caregiving make saving difficult
Women live longer than men after the traditional retirement age of 65—18% longer, on average—yet women save less than men do to support themselves in retirement, Census Bureau data shows.
Why women save less for retirement There’s no single reason why women generally tend not to save as much for retirement as men. These are just some of the factors: Having a college degree does not make a significant difference. “Women with bachelor’s degrees who work full time make, on average, 26% less than their male peers,” says Melody Evans, a TIAA wealth management adviser.
The underrepresentation of women and people of color in the field “can make it more difficult for women to meet with someone who better understands their needs and can tailor a plan that will help them achieve their short- and long-term financial goals,” Evans explains. Related: Women are still falling behind in retirement savings; how to catch up, especially if you’re over 50
Evans at TIAA says her firm has launched a Retire Inequality campaign to draw attention to the need for women to save sooner and save more. “The sooner you start saving for retirement,” she explains, “the sooner your money will compound.”Do not wait to save Evans recommends having money deducted from your paycheck and deposited directly into the retirement account.
If both women put their money into the S&P 500 SPX, about 40 years later, the woman who started investing at 25 would have more than $400,000. “The woman who waited an extra 10 years and invested twice as much money would have barely $300,000 — a difference of about 25%.” How society can help Women can take some steps to save more for retirement, but many of the issues that influence how much they invest are out of their hands. However, our team of experts had several solutions:
New Retirement Plan Limits: Miller also notes that in many countries, retirement plan contribution limits are the same for both men and women. However, he believes limits should be re-evaluated to account for the fact that women tend to live longer. “Adjusting contribution limits to allow women to save more on a tax-advantaged basis can help them build larger retirement nest eggs,” he says.
Financial Literacy Programs: Increasing financial literacy for women is a crucial step that society can take to help close the gender retirement savings gap.
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