As women, we’re all aware of the gender gap when it comes to equal pay in our careers. But are you fully aware of the ramifications this has on your financial life?
In 2016, The National Institute on Retirement Security released its study titled “Shortchanged in Retirement,” which identified that women are much more likely to face poverty in retirement than their male counterparts.
The report highlighted what it termed the “three-legged stool” of middle class retirement as the cause of this disparity: social security, a pension and personal retirement savings.
The resulting findings? The shocking knowledge that women are 80 percent more likely than men to be impoverished at age 65 and older.
With this knowledge at hand, it’s crucial you take every step available to you to ensure your financial plan is as well-crafted for your unique situation as possible, ensuring a future of financial confidence for you and your family.
Parents, children, and other loved ones often have financial needs, and both women and men may provide help for family members, which may divert funds from retirement savings.
Every woman’s life is unique and many women capitalize on the benefits available to them, including participating in an employer-sponsored retirement plan or funding an IRA, to build the assets needed for their later years.
It’s important not to underestimate how much you may need or the importance of ongoing contributions to retirement accounts to build assets over time. Although there are no guarantees, the longer you stay invested, the more likely that your contributions may benefit from compounding, when investment gains are reinvested and potentially earn even more over time.
There is also the issue of the length of a person’s career and how much time an individual has to build retirement assets. Many women take time off for caregiving responsibilities, and during these years they may not add to their retirement portfolio.
In addition, time off from work may affect Social Security benefits because those who are not working do not earn credits that are used to determine retirement benefits. Be sure to consider how you will pay for health care expenses not covered by Medicare or other medical insurance.
It is not unusual for an individual’s retirement to last 20 or 30 years or more. The current life expectancy of a female at birth is roughly 81 years, compared with 76 years for a male.
Although five years may not appear significant, many people in this age group incur expenses for health care and other items while living off of Social Security and personal assets
When considering sources of retirement income, it’s a good idea to visit www.ssa.gov or review your annual statement to estimate your retirement benefit from Social Security. If you find that your retirement assets are coming up short, delaying retirement or saving more while you continue to work may be helpful strategies.
If you would like to discuss this topic in more detail, I invite you to get in touch.