Women get the short end of the stick when it comes to retirement.
It starts with differences in earnings and, thus, less money to save for retirement. But other factors come into play: They are more likely to leave the workforce to care for children or parents, and they live longer.
But a Brookings Gender Series paper recommends several policy changes that could address these issues.
“Public policies that aim to boost women’s status in retirement should focus on the ways women participate in the labor market and in wealth accumulation programs as well as on specific retirement programs and benefits,” authors Grace Enda and William G. Gale write in the paper, How Does Gender Equality Affect Women in Retirement?
There are several reasons for women earning less over their lifetimes, including interrupted careers due to caregiving or childbearing, or part-time or low-wage work to maintain flexibility for those responsibilities, the paper states.
In fact, “One study found that a woman with one child earns 28% less on average over her career than a woman without children, partially as a result of time out of the work force,” the authors state. “Each additional child reduces average women’s earnings by another 3%. Women are also more likely than men to care for their aging parents — a responsibility that predominantly falls on women over the age of 50. People who leave the labor force early to care for a parent or other elderly relative lose an average of $142,000 in wages.”
The median earnings of women who worked full time were 81% of their male counterparts’ in 2018. When controlling for “age, education, job tenure, occupation, job title, location, and industry, the figure rises to 94.6%,” the authors write.
They credit the difference in those figures to “social constraints and biases” pressuring women into lower-paying jobs.
Taxation also takes its toll, state the authors: ”By taxing the first dollar of a second earner’s income at the same marginal tax rate as the last dollar of the primary earner’s income, the tax system discourages work among married women.”