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Top 6 Gender Gaps in Retirement: Women vs. Men

How many things about gender gaps in retirement do you know about? 

Your life expectancy, earning potential, income, and social expectations are all factors that affect your retirement savings and are gender-specific. While acknowledging the obstacles that still need to be overcome, we can and should always be grateful for the amazing progress made toward equality.

On the other hand, we are fully aware of the challenges women experience when trying to save for a comfortable retirement, even though many areas need our attention. Women are finding themselves on the lowest rung of the wealth ladder for no fault, so let’s examine the obstacles they face and consider ways to overcome them.

So speaking of gender gaps in retirement, who do you think would need more money? Women or men? Let’s see:

gender gaps in retirement
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1. Women are more risk-averse

One of the first gender gaps we will talk about in the article is about the risk women take compared to men. Women are often more cautious when taking risks. Salary discussions, medical data, and investment portfolios have all shown this. Studies reveal that men and women exhibit similar tendencies towards risk-taking initially.

However, women tend to become more cautious over time, primarily due to experiencing negative consequences from “risky” actions such as asking for a raise or promotion. This conditioning leads women to take on less risk compared to men.

Even though increasing investment risk isn’t always the ultimate aim, it’s crucial to be certain that you’re taking on the right level of risk to your objectives and your anticipated use of your assets. The problem of not having enough money saved for retirement is made worse by this “investing gap” and the income gap.

2. Men have more of a vision in terms of achieving their goals

It may come as a surprise, but another gender gap is that men often have a clearer idea of how they want to achieve their goals when it comes to saving for retirement. A poll found that just 60% of women had a retirement strategy, compared to 75% of men who had one (either written down or in their brains).

It was shown that a much higher percentage of women (51%) than men (38%) estimated the amount of money they would need to save for a safe retirement.

Women are likewise less confident about retirement. Compared to 34% of males, just 20% of women are “very confident” in their ability to retire comfortably.

3. Women are paid less than men for doing the same job

One of the biggest gender gaps is about how much women and men are earning. This goes hand in hand with the next issue about Social Security, but we will talk about it a bit later. The U.S. Census Bureau has been monitoring the wage gap for over 40 years. Research conducted by the Pew Research Center reveals that while the difference has been gradually decreasing throughout this period, starting at 65 cents for every dollar earned by a man, it has remained stagnant in the low 80-cent range for the last two decades.

That’s not only a standalone issue; it may also significantly affect retirement funds. Based on a position with an average beginning salary of $50,000 at age 25, the 5% income differential alone would result in nearly $780,000 in additional savings at age 65 if the $2,500/year difference is deposited into a retirement account growing at a rate of 7% annually.

Taking it a step further and assuming a pay differential of 20%, or $10,000 per year, you are now talking about approximately $3,150,000 in lost retirement funds.
Not to mention that these numbers don’t count the potential missed income-related benefits like Social Security and employer matching.

4. Women receive less Social Security

Because your Social Security benefit is based on your top 35 years of income if you earn less, your benefit will be less. This statistical likelihood is tied to the pay gap and caring. Women are more likely to get lower Social Security benefits. Women typically retire sooner and live longer than men, which adds to the smaller amount and results in less money being available for longer.

What can you do to make the most of your benefits? Even while there is still no way to close the gender gap, you could still think about delaying until you reach full retirement age, or even better, till you are 70 years old.

Married and divorced people are subject to different rules, so if you are having trouble understanding them, be sure to speak with a financial expert.

gender gaps in retirement
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5. Women may pay more for healthcare costs:

Women are expected to need more health care than males, yet many individuals fail to consider this when planning for retirement. Due in part to their longer life expectancies and higher healthcare demands, women often face higher retirement medical costs.

These costs might not be entirely covered by Medicare, particularly if long-term care services are required. I’d advise you to save individually and try to anticipate all the health care costs. It’s good to have a health savings account—one that you will never touch until you really need it.

If you aren’t eligible for an account like this, you can consider saving the health care funds in your 401(k). Aren’t you exactly sure about all these retirement savings? No worries; a financial advisor can help you.

6. Women tend to put other family member’s needs above them

This is no surprise because women frequently prioritize the needs of their families and other loved ones. This might mean providing care, paying for a child’s college education before retiring, or giving most investment decision-making to a spouse.

More than one-half of women report having little to no influence in decisions about retirement and other long-term financial planning. Especially over an extended period, this might leave women with fewer assets and retirement savings.

Remember that you will probably live for quite a while, and being financially independent is the key to success, so at least this time, start saving enough for yourself before giving others priority.

Are you afraid of your retirement years and of the fact that you won’t be able to save everything you need to live comfortably? Check out this book, The 5 Years Before You Retire, Updated Edition: Retirement Planning When You Need It The Most, it will help you have a clearer image of what your finances should be in a way that works for you.

Bottom line:

According to the article’s major discovery, US women have less financial literacy than men. Regarding financial literacy, disadvantaged minority women performed worse than their white counterparts. Specifically, minority women correctly answered 38% of the questions, compared to 54% for white women.
The first step in reducing the retirement savings gap is to increase financial literacy and learn about money. Understanding when and why to save is vital. It’s best to start studying about retirement savings as soon as possible.

You can be 50, 60, or older when you begin financial education. If you aren’t okay on your own, you can always ask for professional help. Just keep in mind that every person has unique financial circumstances, and for those of you who are fewer than five years away from retirement, this is an essential step in helping you anticipate what retirement will look like.

You may also be interested in: Your Home Can Boost Your Retirement Income: Here’s How

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