How Women Can Create a More-Secure Retirement
Retirement insecurity runs high among the baby boomer generation, but female boomers in particular feel less prepared for their golden years.
While women continue to be a growing and thriving part of the workforce, a recent survey by Charles Schwab found that only 36% of women believe they’ll have enough money for a comfortable retirement.
Historically lower wages and time out of the workplace to raise their family, can mean that women–who generally live longer than men–have saved less for their retirement and will receive lower Social Security income. Analysis of U.S. Census data by Wilder Opportunities for Women showed that 42% of all women lack financial security and three out of five women over 65 cannot afford to cover their basic needs.
To better understand the unique retirement challenges women face, I spoke with Kelly Livers, regional branch executive and national chairperson for the Women’s Interactive Network at Charles Schwab. She encourages women take a more active role in financial planning, especially when it comes to retirement. Here’s what she had to say:
Livers: Women have seen a lot of improvements in the last several years: Their earning power is increasing; they’re receiving more bachelor’s degrees, master’s degrees, and doctorate degrees than men; and their overall employment rate is at an all-time high. In fact, the Labor Department reported that as of September 2013, female workers had recovered all of their jobs lost during the recession and then some, speeding ahead of men who have yet to make a full comeback. In 2010, women became accountable for 50% of private wealth in the United States.
Despite all of this improvement, the average woman still earns a lower salary than her male counterpart. Data released this past October by the Labor Department shows that full-time working women aged 55 and older earned just three-quarters of the income of men in the same age group in 2012. This significant difference in earnings has a major impact on how much women are able to save, leaving them with a smaller nest egg for retirement than men.
On top of lower earnings, women spend more time out of the workforce due to caregiving for children and elderly relatives, adding up to an average of 12 fewer years in the workforce than men. This translates into 12 less years of savings, which has a dramatic impact on their investments’ ability to compound.
Boomer: What are the reasons baby boomer women will have a more expensive retirement?
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