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4 Serious Differences Between Men & Women When It Comes to Retirement

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In a perfect world, men and women would be treated equally and paid equally, and there would never be any gender discrimination. But we don't live in a utopia, and the world is far from perfect.

While women have made great strides since the Mad Men days, when they were pigeonholed into being housewives or working as secretaries, they still have a long way to go when it comes to full equality. It's fantastic that women now make up more than 10% of CEOs who lead Fortune 500 companies, but that's a tiny number, compared to the 90% of male leaders.

This inequality has a huge impact on retirement, as well. If you're a woman, you're unfortunately carrying the short end of the stick here, too. Here are four serious differences between men and women when it comes to retirement.

© Getty Images A couple sitting in a park with a golden retriever between them.

1. Income inequality puts women at a great disadvantage

The more money you have, the more likely you'll have a comfortable retirement. But women typically are at a disadvantage when accumulating income, because a majority of them can expect to earn only 83% of what men make. Since most women won't find themselves in top executive positions, they'll automatically fall shorter than men on the income spectrum.

Mothers tend to be the primary caregivers for their children and therefore will spend more time out of the labor force than their male counterparts. This will hurt a mom's ability to earn those valuable dollars and cents in savings that are necessary to accumulate for a comfortable retirement.

And when women do go back to work, they tend to work part-time or accept lower-paying opportunities that offer flexibility so that they can still perform their motherly duties. (According to the Brookings Institution, becoming a father has no impact on a man's salary, ironically.)

2. Lower lifetime income means a smaller Social Security benefit

Your Social Security benefit is based on your 35 highest-income years. But if you stay home to raise and nurture children, you could either be short of that number of working years or have too many years when you earn an income that's too low to receive a decent retirement benefit. That partly explains why, on average, Social Security benefits for women are 80% lower than for men.

And that number applies to all women -- mothers or not.

According to Brookings, the Social Security benefit of a woman who has a child will be reduced by 16%, on average. And if you want a maximum benefit in retirement, don't even think of having more children, because each one of them will reduce your benefit by another 2%.

Lastly, because women tend to receive a lower Social Security benefit, they would, logically, need to save more money to cover that shortfall. But that's hard to do (see No. 1 above), which explains why they might sometimes feel like hamsters running on a wheel in a cage and getting nowhere, financially speaking.

3. Women, on average, live longer than men

It's a strange phenomenon, but women tend to have longer lives than men. This might be due to a variety of factors. Some theories are that estrogen helps protect women against heart disease, or they simply have stronger immune systems.

The Brookings study found that in 2020, a 65-year-old female could expect to live for another 21.1 years, while a 65-year-old man averaged 18.6 years. Living longer is great, especially if you're in good health -- but it also means you'll need more money for those extra years. And because women tend to save less and get lower Social Security benefits, they are more likely to run out of money in their later years.

4. Men tend to be more financially literate

It's hard to be financially literate when managing money and investing aren't taught in schools. But if all your time is eaten up by raising a family, working full- or part-time, grocery shopping, cooking, vacation planning (and the list is endless), it's hard to find the time to become savvy about personal finance.

While men aren't taught about it in schools, either, they somehow tend to be more financially literate. In a 2022 survey by the TIAA Institute and the Global Financial Literacy Excellence Center, women answered financial questions correctly 45% of the time, while men did 55% of the time. And when baby boomer women were taken out of the equation, female millennials answered questions correctly only 41% of the time, while female Gen Zers answered correctly only 38% of the time.

This is one area where you can buck the trend. There's a lot of information available to increase your knowledge. If you're wondering where to begin, you can start with The Motley Fool's 13 Steps to Investing Foolishly. It's in your power to get educated and control your financial life if you currently feel overwhelmed.

These all are significant differences that could put you at a disadvantage when it comes to retirement. But none of them are insurmountable. If you work hard and save as much money as possible, and learn about investing and saving money, you can turn the odds around and come out on top. You don't have to live in a Mad Men culture anymore.


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Schedule20 Jun 2024