Women lag behind men in retirement savings

Women lag behind men in retirement savings

Women are more concerned than men when it comes to saving enough for retirement.

The coronavirus pandemic has not helped.

According to a February 2021 survey by the National Institute on Retirement Security, around 60% of women said they feared they would not be able to retire financially secure. This is compared to 51% of men (again a rough number) who said the same thing.

According to the survey, women were also more likely to say that one employer-sponsored plan was not enough to save for retirement. The women also said it has become difficult to save for retirement, citing such things as the rising cost of long-term care, stagnant wages, lack of pensions, more debt and little money. help saving for retirement. .

Dan Doonan, executive director of the National Institute on Retirement Security, said: “When you look at women’s perspective on retirement, they tend to be a bit more pessimistic about their own situation and the ability of others to save enough for retirement. “They also have more control over the fact that retirement becomes more difficult over time. “

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covid effect

The gap between what men and women save for retirement has long been documented. In 2016, the median household income for women aged 65 and over was $ 47,244, which includes income and income from retirement, inheritance and social security, according to a May 2020 article by National Institute for Retirement Security. The figure was $ 57,144 for men 65 and over.

Many factors contribute to the gender gap in retirement savings. For example, women still generally earn less than men and spend more time outside the labor market looking after children or family. Women also outnumber men, which means they need to save more in their later years.

“Some of it is outside the pension infrastructure. The pay gap between men and women exists, and that is after the women retire, ”Doonan said.

The coronavirus pandemic has worsened the current gender gap in retirement savings as women are more likely to lose their jobs or leave the workforce to care for children or other family members. the family due to over-representation in the most affected sectors.

Women are working much slower than men to recover from the pandemic. According to the Ministry of Labor, women obtained 28,000 jobs in August, while 207,000 men found new jobs. About 39% of unemployed women have been out of work for six months or more, and more than 25% of unemployed women have been out of work for more than a year.

All of these things negatively affect your ability to save for retirement.

What to do to rebuild?

Of course, waiting for retirement during the pandemic or saving less because you lost your job, part of your income, or any other change in circumstances is fine. It is possible to get back on track and rebuild your retirement savings.

“In the short term, it doesn’t matter if you have to adjust,” said Marguerita Cheng, certified financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.

One way to continue contributing to your 401 (k) or individual retirement account, says Kelly DiGonzzini, CFP, director of financial planning at Beacon, is if you’ve lost your job and your employer. sponsored plans. Pointe, an independent consulting firm in Newport Beach, California.

No matter how much you are able to invest, it will increase over time with the help of the stock market. “The market is going up like crazy,” Digonzini said.

If you can’t save consistently, allocating your share of windfall profits like stimulus checks or tax refunds is a good way to help in retirement, said Cheng, a member of CNBC’s advisory board.

Women should also focus on their expenses and live within their means, said Shweta Lavender, CFP and analyst at Francis Financial, a New York-based company dedicated to serving women, couples and those facing divorce.

“What we’re trying to share with our customers right now is to focus on what they can control,” Lownde said. He added that while they can’t control the foreclosure or the job market, they can make sure their budget is tight.

What we are trying to share with our customers right now is to focus on what they can control

Shweta Lavender, CFP

Francis Financial Analyst

And, those with existing portfolios may take some time to review their asset allocation to ensure that they are investing in a diverse group of stocks, bonds, real estate, cash and more, Lownde said. reduces the risk.

“Even in a year like 2020, we have seen the benefits from our clients who have invested and diversified in the market,” she said.

Working with a financial advisor, if possible, can also help women make sure they are on track to retire when they want to and formulate a strategy to address it if they are not. . Do it.

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Disclosure: NBCUniversal and Comcast Ventures are investors chestnut.

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