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The Gap in Retirement Income Between Men and Women Is Shockingly Large

By Christy Bieber – Jul 17, 2020 at 6:33AM

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The wage gap has a major impact on female retirees -- and it's not a good one.

Most people have heard about the gender pay gap by now, as workplace salary data have clearly and consistently demonstrated men are paid more than women. But have you heard about the retirement income gap? 

Sadly, new research from the National Institute on Retirement Security has shown that men, on average, have much more money in retirement than women.  And while this may not be a surprise, it has profound consequences -- especially since women tend to live longer and may be more at risk of having too little money to ensure a comfortable retirement throughout the whole of their lives. 

Older woman sitting on couch looking at a check with calculator in hand.

Image source: Getty Images.

The retirement income gap between men and women is huge

According to the National Institute on Retirement Security, median retirement income for women aged 65 and up is $47,244. For men, on the other hand, median income among retirees 65 and over is $57,144. That means the typical American man has $9,900 more in retirement than the typical American woman, and median retirement income for women is just 83% of what it is for men. 

There are a number of reasons for this, but the fact women are paid less than men, on average, is the leading driver of this discrepancy. Because of the gender pay gap, women would have to contribute a larger percentage of their salary to have as much invested as men do. And since Social Security benefits are based on average earnings over your 35 highest earning years, women who rely on their own work record to set their benefit amount are going to have less money coming in from Social Security too. 

The National Institute on Retirement Security also points out that women are more likely to work part time, which reduces the income they earn and can invest as well as lowering their Social Security benefit. And part-time workers are less likely to be eligible to contribute to workplace 401(k) plans, which makes it harder to save money for retirement and reduces the chances of women getting an employer match that bulks up their retirement investment account. 

What can you do about it?

Sadly, there's not a lot that anyone can do about the retirement pay gap, as it's a result of a whole host of factors that leave women with less in retirement.

You can work on doing your part to stop the gender pay gap by sharing salary information and supporting open salary policies; fighting for family-friendly policies in the workplace; negotiating your salary and raises; and supporting other policies aimed at reducing the gap. But systemic change has to happen to solve this issue.

But until major shifts in workplace culture occur, women are left in a position where they may simply need to save more of their income for retirement so they can have the security they deserve. While this isn't fair, it's reality, and those who won't want to find themselves with too little in their later years will have no choice but to make the effort to maximize savings even if it means making other financial sacrifices early on in life.

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