Women may face a steeper uphill challenge for a secure retirement than men. Here’s why:
Women are likely to live longer than men by roughly five years which means they are more at risk to outlive their retirement savings. Throw in the cost of additional years of health care and now there is a greater need to save more.
The gap in economic equality is narrowing thanks to women gaining work in higher-paying fields as well as holding higher-ranking positions. Still, there is a significant disparity in wealth. The wealth gap looks at your total balance of assets minus debts, so it gives a much more accurate picture of how you’re doing financially than measuring wages alone.
Women tend to be more risk averse in their investments and therefore risk sacrificing growth opportunities for safety. Saving is an important step in retirement planning, but it’s also important to take opportunities to build wealth.
Likely to Work Less
Taking on the responsibilities as a caregiver can lead to gaps in employment for women. Nearly four in 10 mothers said that at some point in their work life they had taken a significant amount of time off or reduced their work hours to care for a child or other family member. Roughly a quarter (27%) said they had quit work altogether to take care of these familial responsibilities.* Ultimately, this leads to fewer years worked and a smaller contribution amount toward their retirement, resulting in lower lifetime savings.
The good news is that women can overcome these challenges by having a sound plan and saving early and often. If you are a PERA member, you have access to the PERAPlus 401(k) Plan to help you save in addition to your PERA Defined Benefit Plan. If you are already contributing to the PERAPlus plan or another voluntary savings plan, log on to your account and review your current saving rate. Once you’ve seen how much of your income you’re investing for retirement, you may want to consider increasing your savings today to take action for your retirement tomorrow.
This article was written by Voya for PERA's Investor newsletter.