By Craig Erwin, Ph.D.
Many women find it difficult to retire when they want. Some find it hard to retire at all. Why? There are many reasons. Women tend to make less money than men and to have far less wealth (assets such as cash, stocks, bonds, and real estate). Women make 79 cents for every dollar men make, which puts women at a disadvantage in saving for retirement. Women also live longer than men and the longer you live, the more money it takes. That’s why it helps to put off retirement as long as possible. The fewer years you spend in retirement, the less money you need to save for retirement. Women are also more likely to work part-time than men. Working part-time almost always means lower pay and no employer-sponsored retirement savings plan.
Married women tend to rely heavily on their spouses to manage the family’s finances and to plan for retirement. Having to manage the finances is a big challenge for women who lose their spouses to divorce or death.
Women tend to put others’ needs (e.g., children’s, parent’s, spouse’s) ahead of their own. They may help children pay for college instead of saving for their own retirement. It is also common for married women to put their husbands’ careers ahead of their own, interrupting their own careers to have children or provide care to an aging parent. It is a great challenge for women to keep their careers on track, given the career disruptions they may face. A woman may work part-time after the birth of a child, but this also affects her career, resulting in lower pay and the loss of her retirement savings plan.
Medical expenses are sky-high for all of us, but they are highest for women. Women also tend to live longer, so they are likely to need to cover medical expenses for more years in retirement than men.
Finally, divorce can be very expensive for women. If a woman and her husband divorce before they have been married ten years, she will not be able to draw social security benefits on her ex-husband’s record. But divorce is costly in other ways. In a divorce a women can abruptly lose half of her assets as well as the security and regularity of her husband’s paychecks.
So, you see, life is terribly expensive for women.
Have you quit a job or taken leave for childbirth or another reason? Are you concerned that you may not be able to retire in a timely or comfortable manner? Which living expenses are you most worried about covering after retirement?
For more information on the costs and challenges women face, click on the following links: