(Bloomberg) — So here’s what you need to do: Just save a lot more while earning a lot less.
While both men and women face big retirement-savings challenges, the hurdle is higher for many women. To have a decent standard of living in old age, women, who earn on average 78 cents to a man’s dollar, need to save $126 for every $100 men do.
That’s the conclusion of a report analyzing savings shortfalls faced by both genders. Financial Finesse, which provides financial education programs to more than 600 organizations, examined data on median income, retirement savings, life expectancy, 401(k) salary deferral rates, and projected health-care costs for a woman and a man, each 45 years old. The goal: Figure out how much each needed in order to retire at age 65 and live on 70 percent of his or her pre- retirement income.
The gap that emerged between the sexes: 26 percent. A man’s retirement shortfall was more than $212,000. A woman’s? More than $268,000.
And that’s just how to reach 70 percent of pre-retirement income. It doesn’t take into account whatretirement will actually cost, which is where the gap turns into a chasm. The report used numbers from the Bureau of Labor Statistics’ consumer expenditure survey focusing on expenditures for people 65 and older.
Against those averages, Financial Finesse figures that to fund projected average retirement expenses at age 65, the median 45-year-old man needs to save an additional $270,000 or so. The woman is short $522,000.