Women work less, earn less and save more than men. They are also more likely to end up in poverty during their retirement.
Brookings recently looked at U.S. Census Bureau data and found that retired women, especially the divorced or widowed, are at risk for downward income mobility and poverty.
The poverty rate of those 65 and older, according to 2013 Census Bureau data, shows a clear difference between men and women. Of those aged 65 and older, the poverty rate for women is almost double that of men, 11.6 percent for women 65 and older compared with 6.8 percent for men.
That’s not to say women aren’t saving, because they are. A Vanguard analysis of more than 1 million 401(k) savers found that women are 10 percent more likely to enroll in their workplace savings plan and save a bigger chunk of their paychecks, but those women had an average balance that was considerably less than men, $78,000 vs. the male average balance of $121,000.
Nicole Mayer, a partner at the wealth management firm RPG – Life Transition Specialists, attributed the difference between men and women’s retirement savings and poverty rate to several factors: women tend to work less, earn less and live longer.
“A lot of times women take off for childbearing years, to raise kids and also women tend to be the ones to help with aging parents or a sick spouse — so they end up working less,” Mayer said. “When you’re working less, you’re not putting away — even if being an aggressive saver when they are working — they can’t necessarily keep up with the same amount of savings.
Research has shown that women work overall 12 years less than men do over the course of their careers, according to the AARP Public Policy Institute.
“Well, 12 years compounding interest, that’s a huge dollar amount that is hard to catch up to even if they’re saving more,” Mayer said. “A lot of it is societal. The women’s role is generally, obviously, to have kids and then they raise kids and generally the women end up helping their aging parents and they take time off for that.”
Moreover, add to that the data that men typically earn more than women and the average lifespan is longer for women — that all “plays into how women end up saving more but having less in retirement,” Mayer said.
In addition, Mayer added, women also tend to help out their families more, monetarily.
“If they’re using their retirement assets to help children or aging parents or they’ve used their assets to help a sickly spouse, that tends to be why we’ll see the poverty rates for women in retirement are much higher than men,” she said.
The figures look worse for the divorced and widowed. As Benjamin H. Harris and Aurite Werman stated in their Brookings analysis, “the 2012 elderly poverty rate for widowed and divorced women was nearly three times that for married women and the elderly poverty rate for divorced women stood at nearly twice that for divorced men.”
Mayer helped explain why this might be.
“If the woman — especially depending on where in her life she got divorced — didn’t advocate for herself to get an equal share of assets, it’s really going to have a detrimental effect on her retirement,” she said. “… she basically sometimes has to start from zero or significantly less, and same with widows. Depending on the age of when the spouse passed away and/or how sick the spouse was before and the level of care they needed, that can play a major impact on the person and how much money they have for retirement.”
Mayer advises people going through transitions like divorce, loss of a spouse or a job loss as a life transition specialist.
“I always advise women to look at their current salary and make sure their salary and contributions are in line,” she said.
Also, she added, women need to have the tough conversations with their supervisor to make sure their salaries are in line with what the going rate is, whether they’re female or male.
“Most importantly,” Mayer said, “if you make more, you gotta save more — especially if you’ve taken time off in your career to have kids or help aging parents or help a sick spouse. You’ve got to make up that time, and the only way you can make up that time is by saving more.”