Women have made incredible strides in closing the wage gap in recent decades. In 1986, a woman could expect to earn roughly 64% as much as a man, while in 2023 (the last year the information is available), that number is 84%, according to The Institute for Women’s Policy Research.
It’s progress, but not parity.
Women’s economic well-being falls short in important areas like median income and retirement security. According to the U.S. Department of Treasury, women hold fewer retirement assets and are more likely to be impoverished at the end of their lives than men.
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The reasons for the disparity are many, but one big reason is that women are more likely to work in part-time jobs, at least for part of their careers. Part-time jobs typically offer less access (or no access) to retirement plans.
Women are also more likely than men to interrupt their careers so they can take care of children, parents, or other family members. Overall, this means they work fewer years and contribute less to retirement.
According to a recent survey from the nonprofit Transamerica Center for Retirement Studies, only 17% of women workers frequently talk about retirement, and 25% never talk about it. Men aren’t as silent.
Even more concerning, around 30% of women surveyed said they don’t know much about key retirement planning strategies. The nonprofit published the survey “24 Facts About Women’s Retirement Outlook” last fall in collaboration with Transamerica Institute.
“Women have made great strides in educational attainment and access to career opportunities in recent decades. Yet, despite this progress, women are still at greater risk than men of not achieving a financially secure retirement,” said Catherine Collinson, CEO and president of Transamerica Institute and TCRS.
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“Factors including the gender pay gap and time out of the workforce for parenting and caregiving can hinder a woman’s lifetime earnings, retirement savings, and government and employer benefits,” she added. “Moreover, women tend to live longer than men, so they have an even greater need to save for older age.”
Suze Orman wants to help women become more knowledgeable about their finances and how to plan for retirement.
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Women have different retirement priorities and pain points than men
“Our research explores the attitudes and challenges faced by women, reveals pain points, identifies actionable opportunities, and serves as a societal call to action for improving their retirement security,” said Collinson in a news release about the survey.
Among the survey findings:
The “greatest retirement fears” among women include outliving their savings and investments (44%), Social Security being reduced or ceasing to exist in the future (43%), declining health that requires long-term care (41%), not being able to meet the basic financial needs of their family (39%), and cognitive decline, dementia, and/or Alzheimer’s disease (37%).Women’s most often cited financial priorities are saving for retirement (52%), building emergency savings (46%), paying off credit card debt (42%), saving for a major purchase or life event (36%), and just getting by to cover basic living expenses (36%).Women have only $3,000 in total household emergency savings (median) to cover the cost of unexpected major financial setbacks (e.g., unemployment, medical bills, home repairs, auto repairs).Only 16% of women are “very confident” that they will be able to retire with a comfortable lifestyle fully.Just 16% of women say they have “a lot” of working knowledge about personal finance.Two in three women (66%) would like more information and advice from their employer on how to reach their retirement goals.Women estimate they will need to save $500,000 (median) to feel financially secure in retirement, but alarmingly, more than half (55%) say that they “guessed” their savings needs.Few women (17%) frequently discuss saving, investing, and planning for retirement with family and close friends.
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Suze Orman says women should ask themselves some key questions
Having some key pieces of information about your finances will help you make better decisions about money and retirement.
On her Women and Money podcast, Suze shares lots of advice aimed at women (though she has plenty of male listeners, too). Here are five questions Suze Orman says every woman should have the answers to.
If you own your home, do you know the interest rate on your mortgage?Do you know the current interest rate on your savings account?Do you know whether the money you have invested at a brokerage firm is insured?Do you know if the money in your 401(k) plan is protected?Do you know what your 401(k) or other retirement plan is invested in?
Orman said in a CNBC interview that if you can’t answer yes to all of these, consider it a financial wake-up call.
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