The gender pay gap is a hot topic these days, but it’s not the only economic gender gap. Women also are lagging behind men in building retirement security.
Lower pay translates into a gap for women in retirement security, reducing Social Security benefits, pensions, and retirement saving. At the same time, women enjoy greater longevity, which means resources often must be stretched over a longer retirement.
“Americans generally are facing a crunch when it comes to retirement–it will impact men and women,” says Mark Browne, head of North America Channel and global institutional and retirement marketing at BNY Mellon Investment Management. “But for women, there is a compounding effect.”
There are some hopeful signs that the gender gap in retirement security could shrink in the years ahead. Women are working longer, and their participation rate in workplace retirement plans is rising. And more women are boosting their Social Security income by delaying their claim of benefits.
Many women will need to stretch their savings over a longer retirement than men. The average 65-year-old woman is expected to live to 88.8, compared with 86.6 for men, according to the latest mortality tables from Society of Actuaries. Compared with the tables from 2000, the figures are two years higher for men, and 2.4 years higher for women.
Meanwhile, income inequality remains a huge structural economic problem. A woman who works full time over a 40-year period loses $435,480 in lifetime income (today’s dollars) due to the gender gap in pay, according to the National Women’s Law Center, a nonprofit legal and advocacy group. Put another way, the typical woman needs to work 11 years longer than the typical man to achieve accumulated income parity.
Some–but not all–of the gap can be chalked up to one word: caregiving. Women tend to take time out of the workforce to care for children, parents, and spouses. Those career interruptions have real economic consequences. A MetLife study estimated the total lifetime impact for the typical worker at $324,000–a figure that includes lost Social Security and pension benefits.
The average Social Security benefit in 2014 for women older than 65 was $14,234 a year, compared with $18,113 for men, according to Social Security Administration data. A study on women and retirement security (based on U.S. Census data) by the National Institute on Retirement Security found that men receiving defined benefit pensions received $17,856 in median income in 2010, compared with $12,000 for women.
The NIRS found that women are 80% more likely than men to be impoverished after age 65, and women age 75 to 79 are three times more likely than men to live in poverty.
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