Tuesday, March 7, 2017
The glass ceiling has long term repercussions for women. Making less during their working lives may mean they have less for retirement. The New York Times ran an article recently, Money Worries for Retired Women. Looking at a report, the article notes that
Across all age groups, women have considerably less income in retirement than men, according to a report from the National Institute on Retirement Security. For women age 65 and older, their income is typically 25 percent lower than that of men. As men and women age, the gap widens to 44 percent by age 80.
As a result, women were 80 percent more likely than men to be impoverished at age 65 and older, while women age 75 to 79 were three times more likely to fall below the poverty level than men the same age.
It's not just earning less that contributes to the problem, according to the article. Taking time off to raise a family contributes to this matter. As well, consider if the woman is a caregiver for an elder and has to take a leave of absence. (We've blogged several times about family caregivers and the impact it has on the caregiver).
Many women take time off to raise children or care for an aging relative, which gives them fewer years to contribute to a retirement plan. Moreover, because employers will often match — up to a set amount — the money an employee sets aside in a workplace retirement account, like a 401(k) or 403(b), those matching dollars are sacrificed.
“Financial problems in retirement and senior debt arise with insufficient income as a result of lower lifetime earnings and less in savings, costs of family caregiving and divorce...”
Don't forget to add increased longevity into the equation and possibility of running out of money in retirement is a real fear. One piece of good news in the story is that women are working longer, which allows them to save more for their retirement. "Working longer makes it possible to add to retirement accounts and to avoid tapping into them for living expenses. It also frequently comes with employer-based health insurance. It can also deliver a substantial financial benefit in Social Security... The extra years of earnings at these ages replace earlier years of low or zero earnings in the retirement benefit computation formula...."