Why Women Are Retiring Poor
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Why Women Are Retiring Poor
The gender gap is a well-known issue that has been discussed and debated for decades. It means that women have been paid, as an average, less than men; currently the gap is about 16%, according to recent figures, though it was larger in previous decades. While this has had many effects on women during their working careers, it also carries over into their retirement in some ways: lower earnings yield lower contributions to Social Security, lower pensions, and lower 401(k) accounts. In the case of 401(k) accounts, not only is the woman’s contribution lower, but so is the company’s match, if one was available.
Things To Know
- Women typically earn one third less than men during their careers.
- A woman’s less-than-adequate savings have to last even longer than a man’s might.
Time spent in the workforce
Additionally, because of the actual number of years in the workforce, women typically earn one third less than men during their careers. This, too, has a devastating effect on their income after retirement. Because of her role as caregiver, a woman is likely to enter the workforce late to raise children. She is also more likely to interrupt her career, or even retire early, to care for aging parents. Not only would this reduce her earnings, but it may affect whether she becomes vested in a pension plan and/or 401(k). To be vested in a pension plan means that your right to receive payments is protected. Companies usually have a minimum number of years of employment before you become vested. Therefore, if a company has a five-year vesting waiting period, and a woman leaves after four years to care for her sick parent, she loses her right to a pension.
Finally, since a woman can expect to live many years after age 65, her less-than-adequate savings have to last even longer than a man’s might.