Retirement Realities For Women
Have you heard of the term “gender gap” before? It’s a reference that has been described by the World Economic Forum as
“… the difference between women and men as reflected in social, political, intellectual, cultural, or economic attainments or attitudes.”.
In the media, we will often hear gender gap referenced to the inequality for women in employment opportunities and pay. But this inequity doesn’t just remain within a woman’s working life, it extends right through to their retirement.
It is well documented that women have continually earned less than men. In fact, in the United States, a woman earns roughly $0.79 to a man’s $1.00.
Think about that.
That represents around 20% less pay for every year of work. You just have to compound this amount over the course of a 30 year career and you can see the financial impact it could have.
In fact, a Bank of America Merrill Lynch Workplace Benefits Report published in 2019 discovered that women enter retirement with approximately $70,000 less than men. As well, another report published in 2020 discovered that nearly 1 in 5 women have actually nothing saved for retirement.
As much as the inequality of pay and career advancement opportunities for women has been a major contributing factor, there are also other situations and influences that have also resulted in women having challenges in retirement.
Women are the Primary Caregivers
Women have and continue to be most likely to exit the workforce or assume part time jobs in order to accommodate caregiving support for children, spouses and aging parents. As a result, their earnings and potential pensions are impacted.
Being a caregiver can have significant financial implications.
On average, female caregivers aged 50 or older have 58% less retirement funds than non-caregivers. And even though male caregivers are also financially impacted, women still average 10% less than that of male caregivers.
As well when women take time away from the workforce, these breaks in employment can often leave women unrecognized. They are then often overlooked for both pay raises and promotional opportunities.
Women Live Longer than Men
Along with the financial challenges to fund retirement, statistically women also live longer than men. This results in the need for extra financial support in retirement for more years.
In the US, the average life expectancy is 76.6 for men and 81.1 for women and in Canada it is 81.6 for men and 84.7 for women.
These extra years need to be financially planned for in retirement.
It is already known that many people are / or will have difficulties funding their retirement. But what is disturbing is that there are estimates that 16 percent of women age 65 and older live at or below the poverty in comparison to 12 percent of men over 65 living at or below the poverty line.
Along with needing to fund a longer retirement due to extended longevity, healthcare costs and long term care are also likely to be higher which also need to be factored into a financial retirement plan.
Financial Literacy of Women
When it comes to retirement financial literacy, unfortunately both women and men are not that knowledgeable however women fared less on this subject than men.
For example, when men and women between the ages of 60 and 75 were asked to complete a quiz on retirement income, even though neither gender did very well, it was found that 35 percent of men passed whereas only 18 percent of women passed the same test. The only silver lining in this situation is that for those that did pass, they were more likely to have a retirement plan along with a plan to cover the costs of any long-term care that they may need.
Also, when it comes to long term financial decisions, women are still taking a back seat.
In a study completed by UBS, they discovered that 74% of men and 82% of women see joint participation in long-term financial decisions as a necessary step to create gender equality.
But nearly half of women (49%) defer this activity to their spouses. This presents a risky situation for women.
In 2020, there were more than 13.7 million widowed people living in the United States and over 11 million (or 80%) were women. This statistic isn’t that surprising as men tend to marry women younger plus statistically women live longer.
But what is very concerning are the number of women that are not prepared to manage their finances without their partners.
An article in CNN quantified this impact;
“Nearly 60% of widows and divorcees said they wish they had been more involved in the financial planning decisions, with 56% of women discovering hidden debt, inadequate savings or overly conservative or aggressive investments that affected their lifestyle and retirement goals.”
Financial Fraud and Exploitation Risks
Older women are also more targeted and susceptible to financial fraud. RBC Wealth Management’s Client Risk Prevention found that of the elder fraud committed, 68% involved older women. Women tend to be targets more because they live longer, often live alone and may be taken advantage of if they have limited financial knowledge.
Also, if recently widowed this often makes a woman especially vulnerable. Scammers will often review obituaries and target a widow recognizing that they are in a fragile emotional state. Fraudulent calls regarding overdue taxes, bills, or other immediate demands for payments can often happen.
What may also be surprising is that as much as we may think that financial fraud or exploitation is done by strangers, it’s often actually family members that can be the worst culprits.
As reported by the National Council of Aging, in almost 60% of elder abuse cases two-thirds are done by adult children or spouses. It can take the form of being asked for an early inheritance, developing a co-dependent relationship and then requesting payment for care or just simply justifying in their own mind why and how they can take their relative’s money.
Financial Impacts of Divorce on Women Later in Life
Divorce at any age can be a challenging time of life. But what is interesting to note is that the rate of divorce for those 55 to 64 has more than doubled from five divorces per 1,000 marriages in 1990 to twelve per 1,000 in 2017.
Along with the emotional toll this situation can have, divorce can also have a significant financial impact – especially for women. Some research discovered that the standard of living for divorced women over the age of 50 drops by an average of 45 percent whereas for men, it’s quite a bit less at 21 percent.
The Invisible Woman Syndrome
If you are an older woman and have ever experienced a feeling of being invisible sadly, you were probably not imagining it. Believe it or not there is actually something called the invisible woman syndrome.
In an article titled Invisible Woman Syndrome: Do You Have It, Melanie Joosten, a researcher from the National Ageing Research Institute (NARI) shared that her research found many women feel more and more invisible as they age. She said;
“If women start to no longer be attractive, which is what some people consider if a woman ages, then she becomes less relevant. The same doesn’t apply to men because as they get older they get more respect, if anything, and it doesn’t really matter what they look like.”
It seems that an old deep seeded societal view of the role of a woman is the main culprit of this syndrome. If a woman is not seen as being either attractive or a filling the role of a mother, there is an underlying belief that they no longer have any supposed influence and are then often ignored or deemed ‘invisible‘.
This is yet another inequality that women may have to deal with as it relates to aging.
Hopefully by now you have an increased appreciation for the challenges that women face when it comes to retirement and aging and that the gender gap is a real and tangible issue.
But what hasn’t been shared so far is some of the unique positive elements that women are experiencing at this time of life as well.
Free to Be Me
Older women are rediscovering their interests, passions and purpose. As the responsibility for children and household responsibilities begin to lighten, they are finding that they now have the time and energy to pursue areas of their lives that often were dormant or forgotten.
Everyday you can read examples of women who are challenging the status quo of aging and are starting businesses, volunteering, mentoring, participating in politics and a whole host of other activities. They are discovering that this time of life can offer them the independence to try new and different things.
When Divorce May Be A Good Thing
Going through a divorce is never easy. But in some cases, it may actually be reflective of a positive societal shift.
For years, women were dependent on men for financial support and stability. But this dependency has declined over the years. By 1994, 54% of women with children under the age of 5 were working. This has resulted in many women now having increased freedom as to whether they want to remain in a marriage or not for reasons beyond financial dependency.
You used to hear of many cases of where people would stay in unhappy marriages either for the sake of the children or because they felt that they had to honour their commitment to their marriage.
With divorce now being a much more common practice and happiness in life so often being the objective, more women are not willing to stay in unhappy relationships and are choosing to divorce rather than stay.
What is also interesting is that many older single women are not that interested in establishing new romantic relationships. PEW Research found that 71% of single women over 40 say they aren’t looking to date right now versus 42% of men.
This isn’t really that surprising.
Women have been (and continue to be) primary caregivers. Now that many have finished with their days of caring for others (their husband, their children, their parents) and all the associated domestic responsibilities this included, they are now appreciating their independence and not looking to jump into another relationship that might find them falling back into previous domestic responsibilities.
Strong Social Networks
Research is mounting on the value of having strong social networks when it comes to aging. If fact, it has been discovered that maintaining strong social connections may help in slowing cognitive decline plus a whole host of other benefits such as reducing blood pressure, improving mental health and increasing overall confidence.
As reported by the National Academies of Sciences, Engineering, and Medicine (NASEM), more than one-third of adults aged 45 and older feel lonely, and nearly one-fourth of adults aged 65 and older are considered to be socially isolated.
This is where older women differ from men.
They tend to have stronger and larger social networks than men which means they may be better positioned for potentially less loneliness and isolation as they age.
Key Retirement Lessons For Women
To summarize, the realities for women in retirement may be very different for men. As a result, this can affect their planning, readiness and lifestyle in retirement. Women have worked hard over the years to fight for equal rights and opportunities. We need to continue this focus and pressure to make sure that this is extended to support women through their entire lives.
In order to prepare for this stage of life women should;
Focus and understand their current and future financial situation
Know and understand their financial status. Know what their lifestyle costs, their cash flow, financial savings and investments and current and future debts
Ensure that they have a current financial inventory of all accounts, passwords and access authority and details
If in a relationship, recognize statistically there is the potential that they may become a widow. Ensure they know where all pertinent financial information is, how it is managed and if required have the skills to assume this financial management role
If they are not knowledgeable about financial investments and management, get educated and potentially obtain the services of a trusted financial advisor to provide additional support if necessary
Develop and maintain strong social networks
As well everyone has a role to play to support women. As a society we need to;
Support the development of workplace programs and support for caregivers as they enter and exit the workforce
Continue to advance, support and advocate for the rights of women of all ages for pay equity, financial literacy, career and development opportunities and leadership roles
A final thought for us all to remember;
