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Earning less and living longer makes retirement planning harder.

5 minute read

Unequal pay will hurt women for their entire lifetime — not just while they are working.

Women expect their income to last them for 20 years once they retire. However, they believe they will live for 25 years after they stop working, says a study from life insurance company MassMutual. [1] And most people want their retirement savings to last them until they die, not until they run out.

Men have proven to be disproportionately more prepared for retirement than women. That could be due to the fact that they earn more money, and many women leave their financial decisions up to their male partners. If their spouses die before them, ladies often aren’t ready to shoulder the financial burden.

Here are five reasons why women will be worse-off in retirement than men.

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1. Women earn less than men

Women earn 80 percent of what men do, says a survey of 6,300 U.S. workers. That income disparity takes a toll on their retirement savings outlook.

Fifty-five percent of women fear outliving their retirement savings and investments compared to 49 percent of men, according to the Transamerica Center for Retirement Studies (TCRS). [2]

“Despite the progress made in recent decades in terms of higher levels of educational attainment and career opportunities, women continue to encounter financial risks that put them at a distinct disadvantage compared to men with regard to retirement security,” says Catherine Collinson, president of TCRS. “Women continue to earn less than men and, therefore, have less income available to save.”

Households with men heading them save an average of $35,000, while those run by women save a little under $17,000.

That’s the difference in average savings that consumer spending research company ValuePenguin found in another study. [3] And while those averages are jarring on their own, typical savings are even further apart…

  • $9,200 for male-headed households
  • $2,500 for female-headed ones

In addition, men have less debt than women. Of the country’s student loan debt, women owe a stark majority: $890 billion worth. Men, meanwhile, collectively hold only $490 billion of the total, according to the American Association of University Women. [4]

2. Women live longer than men

Ladies are falling short of how many years they will need retirement money for — and underestimating how much they’ll need each year. Forty percent of retired women think they need less than half their pre-retirement income to live well, MassMutual’s study reports. That’s compared to 28 percent of retired men who say the same.

Women live five years longer than men on average, according to a study by Merrill Lynch and Age Wave. [5] Eighty-four percent of 100-year-olds are women, and 64 percent say they would like to live to 100. However, 44 percent of women worry they’ll run out of money by age 80. Everyone should take into account longer life expectancy when planning retirement — but mostly women, the study says.

Because women will earn less than men over their lifetimes, and since women will outlive men, ladies end up paying more in retirement health care than men. Longer lasting lives means that women need to be financially educated better earlier in life.

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3. More women struggle with investing

There’s another financial-related gender gap, other than the “pay gap.”

In addition to earning less than their male counterparts, women are investing their income at lower rates. This could be adding to the fear that TCRS uncovered in its survey. And unfortunately, many women are unaware that this gap even exists.

Almost half (45 percent) of women don’t know there is an investment gap and that they may miss out on up to $1 million during the course of their careers, according to female-focused investing site Ellevest. [6] Ellevest has tips to close the investment gap that can help women save for retirement, which you can read here.

Women are confident in all other matters related to their finances but investing, the Merrill Lynch study finds. They keep pace with men on budgeting, saving, and paying bills. But, there is an imbalance between the sexes on who’s more confident with their investment management.

Only 52 percent of women say they’re confident in managing their investments, while 68 percent of men say the same.

4. Women are still primary caregivers

Women face unique financial circumstances compared to men, according to Collinson. Circumstances like taking care of children or sick or elderly family members. When women need to take time off from their careers they earn less over their lifetime and sacrifice opportunities to workplace retirement savings benefits, like a 401(k).

While 93 percent of men with adolescent children are in the workforce, only 70 percent of their female counterparts are, according to investment management group MFS. [7] It’s even less for women with young children, as just 65 percent of them are working if they have children under 6 years of age. As more ladies are out of the workforce to raise children, saving for retirement is even harder. Moreso because women don’t know the options available to them.

“Women often take time out of the workforce for parenting or caregiving, foregoing income and benefits altogether,” Collinson says. “Statistically speaking, women live longer than men, thereby necessitating that they save for a longer retirement. In combination, these factors can have a compounding effect that severely impedes a woman’s ability to successfully achieve a secure retirement.”

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5. Women leave financial planning to their husbands

Many married women forfeit their opportunity to manage finances — and they’ll regret it in the future, says a study from Swiss bank UBS. [8]

Fifty-six percent of women leave financial decision-making to their husbands, while 80 percent of women end up in a situation where they eventually need to — either because of divorce or their husbands passing away before them.

Eighty-five percent say they believe their husband knows more about finances and therefore should make all major financial decisions.

Nearly all (98 percent) widows and divorcees say women should be more active in making financial decisions. It seems that financial wisdom comes with age. Younger women are more likely to leave their husbands in charge of their finances, the study says.

Sixty-one percent of millennial women leave financial decisions to their husbands, while only 54 percent of women from older generations do.

History and society are to blame for the little confidence women have in their financial decision making, according to the study.

Only 55 percent of women are confident in making a financial decision, while 79 percent of men are. The study suggests women may just psyche themselves out when it comes to money. Sixty-nine percent of survey respondents agree that women underestimate themselves when making financial decisions.

“Despite living in an age of empowerment, the majority of women still waive their participation in long-term financial decisions,” the study says. “The consequences of abdicating responsibility for long-term financial decisions lead many women to struggle after divorce or the death of their spouses.”

Despite all the odds against them, women can still save for a better retirement. Check out Debt.com’s guide to saving for retirement.

Cameren Boatner contributed to this report.

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About the Author

Dori Zinn

Dori Zinn

Dori Zinn is a full-time freelance journalist based in Fort Lauderdale, Fla. She’s president of Blossomers Media, Inc., a web development and online media consulting company. Along with her work on debt.com, she’s been a longtime freelancer for Money Talks News — a personal and consumer finance website — and South Florida Gay News — the largest weekly LGBT newspaper in the South.Zinn has written for a variety of other publications, including Huffington Post, The Week, Quartz, Fort Lauderdale Magazine, Indulge, and realtor.com.

Published by Debt.com, LLC