Income disparities between men and women have led to a retirement shortfall of between 25% and 30%, a report released Tuesday by the Insured Retirement Institute found. The report, “Women and Retirement: Overcoming Retirement Incomes Challenges Facing Women,” found that while half of male boomers have saved at least $200,000, just 35% of female boomers have reached the same level.
Women earn about 82 cents for every dollar men earn, IRI reported, citing the Labor Department. They are also more likely to leave the work force for long periods of time to raise children or care for other family members. Time spent not working is also time spent not contributing to a retirement plan or Social Security. IRI found 44% of female boomers expect Social Security to be a major source of their income in retirement.
Although women frequently make less than their male counterparts, IRI found that women control 27% of investable assets worldwide, a level that is expected to grow 8% over the next five years. Furthermore, in 2009, nearly 30% of women in households where both partners worked made more than their husbands, up from 18% in 1987. Still, despite this improvement, women lack confidence in the steps they’re taking to plan for retirement. Nearly a quarter of women over 50 say they aren’t confident they’re doing a good job planning or they aren’t sure.
Health care, naturally, is a major challenge women will face in planning for retirement, not just because their longer lifespans will necessitate more care, but because the cost of care is rising rapidly. The S&P Healthcare Economic Composite Index found health care costs per capita increased more than 6% between April 2011 and April 2012, IRI noted in the report. Just a third of female boomers say they’re confident they can cover medical expenses in retirement, compared with 41% of men.
IRI notes that one way to overcome these challenges is for women to work longer, something that the Employee Benefit Research Institute finds women are already doing. A 2011 report from EBRI found that the percentage of women over 55 in the labor force increased from 24% in 1996 to 35% in 2011. For women over 65, the percentage increased from 9% to 14%.