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5 Factors Undermining Women’s Retirement Outlook

Catherine Collinson



It’s hardly news these days that many Baby Boomers are planning for retirement inadequately. Lurking behind the shadows of these alarming news stories, there’s a potentially more ominous retirement crisis brewing and it affects 50 percent of the U.S. population: women.

Today’s women are more educated than ever and enjoy career opportunities that our grandmothers’ generation never even dreamed possible. Despite progress made, women of all ages are at a distinct disadvantage compared to men in terms of achieving a financially secure retirement. According to the U.S. Census Bureau, the brutal reality is that the percentage of women aged 65 and older who are living in poverty is nearly double than that of men (11 percent women, 6.6 percent men).

Here are five factors undermining women’s retirement outlook.

1. Taking time out of the workforce to be a parent or caregiver means forgoing the income needed for saving, as well as employee benefits such as retirement benefits. Women are more likely than men to take time out of the workforce for parenting children or caregiving elderly parents. In 2012, among married-couple families in the U.S. with children under the age of 18, only 66 percent of women held jobs, compared to 90 percent of men, according to the Bureau of Labor Statistics.

2. Working part-time brings income but often without retirement benefits. Women are also more likely to work part-time. Women who work part-time accounted for 26 percent of all female wage and salary workers in 2012. In contrast, just 13 percent of men in wage and salary jobs worked part-time, according to the U.S. Bureau of Labor Statistics. Only 42 percent of part-time workers are offered a 401(k) or similar plan by their employer, says the Transamerica Center for Retirement Studies.

3. For single parents, juggling responsibilities can limit career opportunities and makes it even more difficult to save for retirement. Women account for three out of four single parent households in the U.S. with children under age 18.

4. Women earn less than men. Lower wages translates to lower lifetime earnings, lower lifetime retirement savings, and potentially reduced Social Security Benefits. On average in 2012, women made about 81 percent of the median earnings of male full-time wage and salary workers. It should be noted, however, this is a dramatic improvement over 1979, the first year for which comparable data is available, when women earned just 62 percent of what men earned.

5. Women have longer life expectancies and, therefore, greater retirement savings needs. A woman turning age 65 today can expect to live, on average, until age 86, which is two years longer than the life expectancy of a man.You can calculate your life expectancy here.

Does this imply that women should stop being mothers and having children? Absolutely not. That would be catastrophic for women, men, and the future of the human race. A more rational starting point is raising awareness of the issues faced by women and incorporating them into our national dialogue.

Women can take control of their financial futures and retirement destinies. However, it requires being super strategic when incorporating life’s decisions such as taking time out of the workforce into financial and retirement plans.

Here are some few practical tips for women who are considering taking time out of the workforce.

1. If seriously considering time out of the workforce, consider working part-time instead. Conventional wisdom and real life experience has often reminded us that it’s easier to find a job when you already have a job. Part-time work provides income while keeping job skills up to date, staying connected, and making it easier to find full-time employment again when the time comes.

2. Most part-time jobs typically don’t offer retirement benefits — but there are many that do if you seek them out. When searching for part-time job opportunities, be sure to consider whether a prospective employer offers retirement benefits and factor them into the overall compensation package. Once employed, be sure to take advantage of these benefits and begin saving as soon as possible.

3. Whether working full-time, part-time or taking time out of the workforce, find ways to save for retirement. If you don’t have access to an employer-sponsored retirement plan, consider opening a traditional or Roth IRA and get into the habit of saving.

4. If eligible, take advantage of the Saver’s Credit to help boost retirement savings. This tax credit is available to low- to moderate-income tax filers who save for retirement in qualified retirement plans including 401(k), 403(b), and others – or in an IRA.

When was the last time that you had a serious conversation about retirement? Most people aren’t talking about it enough. Nonprofit Transamerica Center for Retirement Studies found that just one in ten women and men in the workforce frequently talk about saving and planning for retirement with family and close friends. Nearly one in three never discuss it at all. 8 Let’s start the conversation today.

Catherine Collinson serves as President of the Transamerica Institute SM  and Transamerica Center for Retirement Studies®, and is a retirement and market trends expert and champion for Americans who are at risk for not achieving a financially secure retirement. Catherine oversees all research and outreach initiatives, including the Annual Transamerica Retirement Survey.

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