Retirement ‘Glass Ceiling’ Produced for Women Due to Income Disparities
Published on August 29, 2012Tax Credits, licensed through Creative Commons (on flickr.com).
For centuries, men have been viewed as the authoritative figures in business. They have garnered higher wages and held prominent leadership roles since the dawn of time. Although women’s rights have come a long way since the age of Pilgrims, a significant income gap still exists between the genders.
In a July 31, 2012 article in Financial Advisor Magazine, “Disparities Produce Retirement Income ‘Glass Ceiling’ For Women,” researchers from the not-for-profit Insured Retirement Institute studied the effects of this income gap between the sexes.
The Institute says that the income disparities women are facing translate into a 25-30% retirement savings shortfall throughout their lifetime. In addition, “half of baby boomer men have retirement savings of at least $200,000, with only 35% of female boomers having reached that level of savings. Only a third of boomer women are highly confident that they will have enough money to cover their health-care expenses during retirement compared with 41% of boomer men.”
The reason for such a difference in retirement savings, reports the Institute, stems from women being more likely than men to be caregivers, thus needing to take time off work which results in a lost or decreased wages. These factors, combined with prevailing income disparities, decreased Social Security and employer-provided retirement benefits.
The disparity comes down to this: Women have less retirement savings and less retirement income from traditional resources, which are required to cover longer average retirement spans and higher lifetime health-care costs.
Therefore, it seems that those preparing for the age of retirement—particularly baby boomers—are in for a rude awakening.
More than 43% of boomer women expect to retire at age 65 or later and more than 34% do not know when they will retire. Nearly 53% of boomer women have not consulted a financial advisor. In light of these statistics, the Institute also found that only four in ten women age 55 and older believe they have done a good job planning financially for retirement; one-quarter of boomer women have little to no confidence that they are planning appropriately for retirement.
If women begin investing smarter from a young age, the gap in retirement savings between the sexes will begin to decrease over time. Whether this means investing in assets that provide greater returns than stocks and bonds, such as nontraditional or alternative investments, or looking into self-directed retirement plans, retirement needs to start popping up on women’s radars—earlier and more often.
To read the article from Financial Advisor, click here.Back to Blog