American workers looking toward retirement have a situation they must take seriously.
In the United States, the “retirement savings gap” — the difference between what people think they need to retire comfortably and what they currently save — is rapidly widening. However, the difference is even greater among women.
In 2020, the “magic goal” for American workers’ retirement savings was $951,000. Then he spent five years, according to a new report. Research by Northwestern Mutualthat number rose to $1.46 million, an increase that outpaced inflation.
Meanwhile, the average amount Americans currently save for retirement is $88,400.
Retirement inequality disproportionately affects women
But there is an even more pressing retirement gap in American society that, like many other gaps, disproportionately affects women. While dollars and cents may seem indiscriminate in terms of earnings, the reality is that retirement outcomes are not gender-neutral.
a Goldman Sachs report Earlier this year, it was found that 28% of women have less than $50,000 saved for retirement. That means one in four women lives on as little as $2,000 a year.
This makes women more dependent on Social Security benefits, but in a cruel irony, women receive 22% less in Social Security benefits on average due to yet another disparity. discriminatory pay gap. Compounding this is the lack of income due to part-time work patterns imposed on women. caring responsibility.
Another reason why women quit their jobs because they can no longer afford to make ends meet is the fact that women tend to: retire earlier than their male compatriots, and often occur unexpectedly without the necessary financial planning in place. Additionally, women live on average five years longer than men, meaning they will need to add to their already scarce retirement funds. Adding all these disparities together, women, who make up more than 50 percent of the U.S. population, are 24 to 30 percent less likely to retire than the remaining 49.49 percent.
So what can be done to address the gap?
Not all solutions lie with women themselves. This isn’t just about changing your mindset or monthly habits. To level the burden on retirees, the government needs to address provisions for part-time workers and provide more support for long-term student loan debt. Such measures would bring positive benefits to women.
Look to the pros
A self-help measure that can turn a woman’s fortunes around is to consult a professional retirement advisor. A small investment can make a big difference in the long run (some employer retirement plans offer this for free).
Our experts can advise you on investment management strategies and the use of target date funds to invest towards your expected retirement date. This suits women who tend to be more risk-averse and focused on the present than men.
Another powerful way to improve your retirement prospects is to understand the power of compound interest. If you’re in the early stages of your career, start planning and automating your contributions as soon as possible.
Finally, don’t leave your financial planning to someone else. If you’re a woman and your partner handles the bills and accounting, it’s time to start planning for retirement yourself. Statistically, there’s a good chance you’ll outlive your male spouse, but either way, you’ll never regret having an influence over your own retirement outcome.
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