A recent article from Get Rich Slowly highlighted a very real concern for half of the population: women’s finances in retirement. Specifically, according to the article, American women tend to be worse off financially in their golden years than men.

The article’s worth a read (for women of all ages), but here’s a look at some of the major points the author makes:

• Women earn less than men. I’m not thrilled about this, but, on average, we only make about three-quarters of what our male counterparts do. Over a lifetime of work, this could add up to a quarter of a million dollars, according to the article. Whew.
• Women tend to be caretakers. Since we’re already earning less and because we’re traditionally seen as “nurturers,” women are usually the ones to leave a job to take care of children or other family members. This means that we’re working fewer years, thus contributing to retirement funds for fewer years.
• Women live longer. I always thought this was a good thing, but financially speaking, it might not be so hot. Having a smaller nest egg to spend over a longer period of time could make for some pretty lean golden years.
• We’re having fewer children. It’s no longer normal to have an enormous brood of children, which can mean there will be fewer candidates to take care of you (financially or otherwise) if you become unable to do so yourself. Part of the reason for this is that women now approaching retirement age are more likely to have been divorced than earlier generations.
• The workforce is changing. Pension and 401(k) plans are not as common as they once were, and may not be as lucrative. Plus, it’s much more common today for someone to have moved from one job to another, which could further confuse retirement funds.

What to Do about It

Luckily, there are steps women (and the people who care about us) can take now to help ease the stresses of retirement.

• Get involved in your finances. Make sure both you and your partner are aware of what’s going on in your financial life – that way, you’ll both be prepared to make important decisions in an emergency.
• Work a little longer. Social Security benefits are based on your highest 35 years of earnings, and if you took time off, years of no earnings may bring your benefits down. A few extra years of work could make a big difference in your payments.
• Don’t think it’s too early to start planning. Even if you’ve just started working full time, it’s not too early to begin saving and investing for retirement.

Additional Resources

What Women Need to Know about Retirement (PDF)

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