Women and Retirement – The Gender Gap

For starters, the overall percentage of women participating in an employer-sponsored retirement plan is lower than that of men, according to research conducted by the Employee Benefit Research Institute (EBRI). This may be due to several factors, including the belief among the majority of women (64 percent) that meeting their family’s current financial needs is impeding their ability to save for retirement.

This was the finding in a recent study conducted by the State Farm Center for Women and Financial Services at the American College. Only 42 percent of women who responded to the survey said they save a certain amount of money every month. In another study conducted by Prudential, women said that their top financial priority is to “not become a financial burden to their loved ones,” while men said their top financial priority is to “maintain their lifestyle in retirement.”

Earnings Gap Remains

Also consider the fact that on average, women still earn less money than men. According to the U.S. Labor Department, white women earn about 81 cents for every dollar white men earn, black women earn 67 cents for every dollar white men earn, and Latino women earn 60 cents for every dollar white men earn. And women spend an average of 12 years out of the workforce to care for their families, a critical time gap that can have a significant impact on the size of a woman’s retirement portfolio.

In addition, women in general often face unique financial challenges once they enter retirement. For example, women live an average of five years longer than men, according to a study conducted by Financial Finesse that studied the gender gap between men and women when it comes to financial literacy. Therefore, they may have to make their retirement savings last over a longer life span.

Also, women tend to face higher healthcare expenses than men over the course of their lives, as well as receive lower average Social Security payments due to less time in the workforce, according to the Financial Finesse study. In addition, 90 percent of women will be solely responsible for their finances at some point in their lives due to divorce or the death of a spouse. However, women in the Financial Finesse study had lower levels of financial knowledge and confidence than men, including confidence in their retirement preparedness and how much they are saving for retirement.

A Silver Lining

There is, however, a silver lining in all of these statistics when it comes to women and retirement. In his conclusion to the EBRI report, the author, Craig Copeland, noted that while the overall percentage of women participating in a retirement plan was lower than that of men, “when controlling for work status or earnings, the female participation level actually surpasses that of men.”

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. Member FINRA & SIPC