6 ways to help beat the retirement gender gap

Posted by Cindy Wilson.
Women aged 65 and older typically have 25% less income than men—a gap that widens to 44% by age 80. 1
Retirement income gap at age 65+ and 80
Reading stats like these can really put a downer on your day. Fortunately, I’ve never been one to dwell on what women “typically” do.
Kind of like a light bulb that is controlled by multiple dimmers, each of us has the autonomy to brighten our own financial outlook—and all it takes is the tweaking of a few dials:
1. Consider turning up your savings rate a notch. It is natural to look to your peers for behavioral cues—such as, the best percentage for your 403(b) savings rate. As women, however, we should be aiming higher than our male colleagues.
Not only are women more likely to take breaks from the workforce—raising children, caring for relatives—but also, when we return, it is often for lower pay and fewer hours. Less lifetime earnings means lower Social Security payments, and because we live longer, we should aim to put almost 20% more aside to cover end-of-life medical bills. 2
Moms may not reclaim those years of lost savings, but they can choose to participate in their employer plans while working—and make saving more of a priority.
2. Think about adjusting your savings rate to get the employer match. Years of not contributing to a 403(b) or 401(k) also means missing out on any dollars matched by an employer. So when it is offered, why turn down “free money”?
3. Calibrate your emergency fund. While long-term savings are a priority, consider diverting some of your paycheck towards a regular savings account. An emergency fund is a crucial buffer for periods of unemployment, when a two-income household may drop down to one, putting that family at more risk of financial hardship (and tempting you to tap into your 403(b) account).
4. Fine tune your negotiating skills. Get together with female coworkers to learn new skills and discuss the unique challenges you collectively face. I run workshops for women and things come up that attendees would not necessarily talk about with, say, their male boss (however great he may be!). Debating controversial questions can be productive. Try asking your girlfriends if they have ever counter-offered a job offer, for higher pay? Then, ask some of your guy friends. Chances are, more of your male friends have taken this approach–or at least tried. Maybe it’s worth a shot.
5. Tweak your retirement age. It is also important to seriously think about working for more years than you might have originally hoped. Look into a phased retirement. Consider the benefits of delaying Social Security benefits and keeping your employer-based health insurance for longer.
6. Consider turning up the dial on “catch-up” contributions. Women who have taken time off to raise kids often work through their 50s to compensate—and there are specific advantages to saving during this decade of life, not least the “catch-up” contributions you can make to your 403(b): In 2018, the annual limit is $18,500 for savers aged 50 and under; for older workers it is $24,500.
Obviously, not all women take time out to raise a family, or follow any other “typical” path. But what is undeniable is that women in general face certain challenges when saving for retirement.
My experience on the ground has taught me that increasing awareness of these challenges can lead directly to positive outcomes. After recent employer-based workshops we saw a marked upswing in 403(b) participation, among those who attended. I’m confident that the needle is moving in terms of women being more attuned to improving their financial future—whether that means learning to negotiate, increasing employee contributions or even considering a later retirement.
1 “Women 80% More Likely to be Impoverished in Retirement,” National Institute on Retirement Security, March 2016, http://www.nirsonline.org/index.php?option=content&task=view&id=913
2 “What is the gender pay gap and is it real?” Economic Policy Institute, October 2016, http://www.epi.org/publication/what-is-the-gender-pay-gap-and-is-it-real/#epi-toc-13
Teachers Insurance and Annuity Association of America has sponsored Ask the Expert posts for informational purposes only. Many of the experts are unaffiliated with Teachers Insurance and Annuity Association of America, College Retirement Equities Fund, and their affiliates and subsidiaries (collectively TIAA), and TIAA makes no representations regarding the accuracy or completeness of any information on the posts or otherwise made available by the experts. Statements of external featured experts are solely their own and are not endorsed or recommended by TIAA.
Responses from experts to questions posed by Woman2Woman community members are intentionally general in nature and are not intended to give personal, financial, or specific advice. Some strategies are complex, and more information is often needed to determine the personal needs of a community member. We strongly recommend that you consult with a financial advisor before taking any action based on an expertʼs opinion or other information you obtain from the Woman2Woman:Financial Living site so that all of your personal circumstances can be taken into consideration. Participation in the site does not render the member a client of the expert or of TIAA.
This site is not designed to accept or respond to requests or complaints regarding specific TIAA accounts, products or services. If you wish to discuss an issue of that nature, please contact TIAA at 800-842-2252. TIAA is not responsible for any opinions provided by members of this site. TIAA is not responsible for the content or privacy policies of third-party sites to which you may link.
The TIAA group of companies does not offer tax or legal advice. You should consult an independent tax or legal advisor for advice based on your own particular circumstances.
The material and responses are for informational or educational purposes only and do not constitute a recommendation or investment advice in connection with a distribution, transfer or rollover, a purchase or sale of securities or other investment property, or the management of securities or other investments, including the development of an investment strategy or retention of an investment manager or advisor. The material and responses do not take into account any specific objectives or circumstances of any particular individual, or suggest any specific course of action. Investment decisions should be made in consultation with an investorʼs personal advisor based on the investorʼs own objectives and circumstances.
Experts may not have medical or scientific training. Any information related to physical or emotional health is not intended to be used in place of a consultation with a physician.
TIAA is not responsible for the statements of community members. We may link to posts made by community members only to direct you to topics that may be of interest to you. This does not mean that we agree with the opinions of these community members. Their statements are solely their own and are not endorsed or recommended by TIAA.
June 28, 2018