By Jason Fuchs, Financial Advisor, Wells Fargo Advisors
Women earn 77 cents on the dollar compared with men, and they’re less likely to be covered by company retirement and pension plans. Combine that with the fact that women tend to live longer, and it’s clear why they need to save conscientiously for retirement. Here’s how to jump-start your retirement planning.
When it comes to retirement savings, women continue to lag behind men. They tend to spend enormous time and energy taking care of everyone else and then neglect themselves – it’s so common.
Women had an average of $50,100 in their 40k accounts compared with more than $89,698 for men, in a 2009 study of nearly two million participants in large-company 401k plans.
What’s more, only 25% of women are confident they’ll have enough money to cover basic living expenses in retirement, according to recent data from the Employment Benefit Research Institute.
Women think of money as a family affair, to help the whole family, not as satisfying their needs.
Savings Handicap
What makes it harder for women? For starters, women live longer than men — about five years longer, according to the National Center for Health Statistics. And that means they need more money to see them through.
Women also have a savings handicap for the following reasons:
Most women earn less than men. While some reports suggest the pay gap is narrowing, the Census Bureau said in September that full-time women employees still make, on average, only 77 cents for every dollar earned by men.
Women tend to spend less time on the job, because of care-taking responsibilities for children and elderly parents (or both), and they are more likely than men to work part-time. Because of the part-time work and/or fewer years in the work force, they are less likely to be covered by company retirement or pension plans.
Women who have joined a retirement plan at work tend to save more than men at the same income levels. But in the life-isn’t-fair department, women in general still end up with less because of their shorter job tenures and incomes that are on average lower than men's.
Family Needs Versus Personal Ones
There are the personal issues. Women tend to think of money as a family affair. They think it’s there to help the entire family, and don’t think of it as satisfying their needs.
I’ve heard a story of a woman who saved consistently throughout her career and was in good shape to retire at 60. But the desire to help an adult daughter with the legal costs of a child-custody battle vastly depleted her retirement funds. The woman, a therapist, worked well into her 70s trying to catch up. Salary is not the critical factor. There are other ways to help.
Even women with CEO salaries may flounder when it comes to their own long-term financial planning. Another story of a middle-aged woman making more than $400,000 a year talks about how this woman was at the top of her game in her career, yet she did not have enough resources to become financially independent.
Many women prefer to help others first. I’m not sure that men in general are pulled in so many directions with their money.
Ultimately, it’s your savings discipline, not your salary that makes the difference. Six-figure salaries can dwindle just like $20,000 salaries. Women with high paying salaries usually have a lot going on that takes up income: high costs for child care, for example, and the maintenance of a certain kind of lifestyle. For professional women, a six-figure salary doesn’t guarantee them anything.
The urgent message is that women need to try harder to prepare for retirement — by saving early and consistently, and by making saving as much a priority as paying the mortgage or the utility bill.
Women earn 77 cents on the dollar compared with men, and they’re less likely to be covered by company retirement and pension plans. Combine that with the fact that women tend to live longer, and it’s clear why they need to save conscientiously for retirement. Here’s how to jump-start your retirement planning.
When it comes to retirement savings, women continue to lag behind men. They tend to spend enormous time and energy taking care of everyone else and then neglect themselves – it’s so common.
Women had an average of $50,100 in their 40k accounts compared with more than $89,698 for men, in a 2009 study of nearly two million participants in large-company 401k plans.
What’s more, only 25% of women are confident they’ll have enough money to cover basic living expenses in retirement, according to recent data from the Employment Benefit Research Institute.
Women think of money as a family affair, to help the whole family, not as satisfying their needs.
Savings Handicap
What makes it harder for women? For starters, women live longer than men — about five years longer, according to the National Center for Health Statistics. And that means they need more money to see them through.
Women also have a savings handicap for the following reasons:
Most women earn less than men. While some reports suggest the pay gap is narrowing, the Census Bureau said in September that full-time women employees still make, on average, only 77 cents for every dollar earned by men.
Women tend to spend less time on the job, because of care-taking responsibilities for children and elderly parents (or both), and they are more likely than men to work part-time. Because of the part-time work and/or fewer years in the work force, they are less likely to be covered by company retirement or pension plans.
Women who have joined a retirement plan at work tend to save more than men at the same income levels. But in the life-isn’t-fair department, women in general still end up with less because of their shorter job tenures and incomes that are on average lower than men's.
Family Needs Versus Personal Ones
There are the personal issues. Women tend to think of money as a family affair. They think it’s there to help the entire family, and don’t think of it as satisfying their needs.
I’ve heard a story of a woman who saved consistently throughout her career and was in good shape to retire at 60. But the desire to help an adult daughter with the legal costs of a child-custody battle vastly depleted her retirement funds. The woman, a therapist, worked well into her 70s trying to catch up. Salary is not the critical factor. There are other ways to help.
Even women with CEO salaries may flounder when it comes to their own long-term financial planning. Another story of a middle-aged woman making more than $400,000 a year talks about how this woman was at the top of her game in her career, yet she did not have enough resources to become financially independent.
Many women prefer to help others first. I’m not sure that men in general are pulled in so many directions with their money.
Ultimately, it’s your savings discipline, not your salary that makes the difference. Six-figure salaries can dwindle just like $20,000 salaries. Women with high paying salaries usually have a lot going on that takes up income: high costs for child care, for example, and the maintenance of a certain kind of lifestyle. For professional women, a six-figure salary doesn’t guarantee them anything.
The urgent message is that women need to try harder to prepare for retirement — by saving early and consistently, and by making saving as much a priority as paying the mortgage or the utility bill.
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