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By: Brian Bristow

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How to Overcome the Retirement Gender Pay Gap

Saving and Budgeting | Investing in the Future

The gender pay gap has been a topic of conversation and concern for years. Statistically, women make about 80 cents for every dollar earned by a man (20% less). Once they hit 65, they tend to make about 25% less than men and make increasingly less than men as they age. There are a lot of reasons for the gender pay gap, which we won’t get into here, but the sad truth is that the gap continues into retirement, leaving women with a lower retirement income than men.


where does retirement money come from?


Where does income come from in retirement?

When you retire, you may rely on multiple sources of income. If you’re like most people, Social Security will be your largest income source. You may have a pension that provides for the rest of your financial needs, or you may depend on an IRA or other retirement savings plan or your personal savings. If those sources don’t meet your needs, you may have to continue working for a number of years to ensure the comfort of your golden years.


gender retirement gap


How does the wage gap translate into a gender retirement gap?

For women, the above-mentioned retirement income sources tend to provide less income than they do for men. 


The fact that women make less while employed, means that they are generally able to put less away before retirement and receive lower matching contributions from their employers. It also means that they will receive less from Social Security, because Social Security income is calculated based on an average of your monthly earnings during the 35 years in which you made the most money.


There are a host of other factors that affect a woman’s retirement savings. For starters, they tend to take fewer risks in investing, which can lead to lower earnings. They also are more likely than men to leave work to raise the kids, reducing the number of years they can contribute to, and receive matching contributions to, an employer-sponsored retirement account.


The real kicker is that women tend to live longer than men, which means the retirement dollars they are able to accumulate need to stretch further than those of their male counterparts.


MEMBERS Financial Services can help.



So there’s a gender gap. What are you going to do about it?

Fortunately, there are some actions you can take, as a woman, to reduce or eliminate the gender gap for your own retirement.


SAVE: The first step is to simply save more. This requires living a thriftier lifestyle so that you can divert more of your paycheck into savings and IRA, 401(k), annuity, or other retirement investment vehicles.


NEGOTIATE: If you haven’t learned the fine art of negotiating for better pay, start learning now. Salary negotiation can feel intimidating, but it is like any other skill; you have to practice in order to perfect it.


INVEST: Work with a financial advisor to make wise investments that are consistent with your capacity for risk. Ask questions and keep in touch with your advisor, making sure that your portfolio is rebalanced regularly and that you understand how each decision will impact your retirement. 


CATCH UP: Once you reach age 50, you can make catch-up contributions to your retirement accounts. At that point, you should have fewer financial responsibilities (the kids will be out of school and you may be closer to paying off your mortgage or other large debts). Put the extra money you have toward retirement.


WORK: You may have to work a little later in life to make sure you have enough to retire on. The later you retire, the larger your Social Security payments will be. If you delay your retirement past your full retirement age, you can increase your monthly benefit amount. You can increase it even more if you earn a raise each year beyond full retirement.


Until the gender gap is closed, women will have to work harder to maintain the same lifestyle as their male counterparts. The good news is that you can reduce, and possibly even eliminate the gap, by using the suggestions above and finding other ways to increase your net worth.


Want to learn more about Social Security? Here are some fun facts. 


Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. FR-2419749.1-0219-0321

About Brian Bristow

Brian Bristow is the program manager and financial advisor with MEMBERS Financial Services located at VSECU.