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Two Steps Forward, One Step Back

We’ve come a long way in this country, but at times it can feel like for every two steps forward, we take one step back. And despite what Paula Abdul’s catchy lyrics say, opposites do not attract when it comes to the issue of gender equality and saving for retirement. Even today in 2020, women still make 78 cents to every dollar a man makes, and without getting too politically charged about this matter, we would be absolutely remiss as financial planning professionals to not account for how this huge disparity in financial compensation plays into the financial security needs of women.


There are a few distinct differences between the paths a man and a woman take to retirement we must dissect. First and foremost, as we mentioned already, despite being in the 21st century, women still do not earn an equal wage to men. When it comes to retirement planning, women cannot save as much as men because they do not make as much. It’s a sad fact and the numbers, literally, do not add up.


And then you take into account that although family roles have come a long way in sharing responsibilities when it comes to child-rearing, 84 percent of women stay-at-home with the children versus only 16 percent of men. While no one can deny the workload, the rewards, and the unending demands of a stay-at-home mom, women who put their career on hold to raise the children also put their retirement savings on hold.


Additionally, as men continue to climb the ladder, receive pay increases, and gain more work experience, women who try to rejoin the workforce often find themselves having to start over. It can be challenging to say the least to jump back in, and even harder to do so where she left off. Part-time work might be a temporary solution, but again, without benefits or equal compensation.


Another major factor for women and retirement planning is that women statistically live longer than men. According to the Social Security Administration, a woman turning 65 today could live until 86.6 years old whereas a man might live to 84. So in addition to making less money, saving less money, and facing challenges re-entering the workforce, the cruel irony is that women, on average, live longer than money and therefore need more money saved for retirement, despite everything else working against them.


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