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Retirement Savings Gap Between Men and Women

Written by: Kristy Welsh

Last Updated: September 11, 2017

It is hard enough to save for retirement in today's struggling economy but add to that the challenge of the sexes and now we have a full blown crisis. While both men and women face retirement savings challenges, the hurdle is even higher for women. Learn why there is a retirement savings gap between men and women and how to overcome these obstacles if you are a woman.

Salary Gap

According to a recent study, in 2015 women earned 83 percent of what men earned — based on median hourly earnings of both full- and part-time U.S. workers. But for adults ages 25 to 34, the 2015 wage gap is smaller. Women in this group earned 90 cents for every dollar a man in the same age group earned. So it is no wonder women have a harder time saving for retirement — they have less salary each month.

With the exception of social workers, the top 10 jobs with the smallest wage gaps had median weekly earnings below the overall median for both male and female workers — $791 per week. Male social workers had weekly earnings of $892, while the median weekly earnings for the profession as a whole were $844.

While women complete college and graduate school at higher rates than men; they earned 47 percent of all law degrees in 2011 and 47 percent of all medical degrees in 2014, this has helped shrink the salary gap but it is not enough to close it. A recent survey on salaries showed a male surgeon earns 37.76 percent more per week than his female counterpart. In real terms, this means a female surgeon earns $756 less per week, which adds up to nearly $40,000 over a year.

In the area of lower paying jobs, women are 94.6 percent of all secretaries and administrative assistants. 

Woman Need More Retirement Savings

Here are a few "fun" facts: 1) Out of the top 49 oldest people alive today, only 2 are men. 2) A woman born today can expect to live 79.8 years - five years longer than a man. On average, women live longer than men which means women will need their retirement money to last longer.

Therefore, adding to the wide gap of salary differences, is the differences in life expectancy and health care costs for men and women in their retirement years. Financial Fitness, which provides financial education programs to more than 600 organizations, examined median income, retirement savings, life expectancy, 401(k) salary deferral rates, and projected health-care costs for a woman and a man, each 45 years old. They wanted to find out how much each person would need in order to retire at 65 and live on 70 percent of his or her pre-retirement income. What emerged was that a man would need to save an additional $277,000 and a woman would need $522,000. Why? Because women have lower social security benefits, longer life expectancy and lower retirement savings in general due to lower-paying jobs. 

Women Need to Start Saving Early

If you are a woman reading this article, you now know you may outlive your husband and you are probably earning much less in the way of a salary than him. This means you are going to need more in the way of retirement savings to live out your golden years in comfort and you are going to have to work harder to get there.

There are many ways to combat the gender wage gap and a lot of companies are enacting policies that will help women balance work and family commitments - such as paid sick days, paid family leave, equal pay protections, and pay transparency practices. Women are also pursuing advanced degrees at the same or slightly higher levels than men.

Having said all of this, it is imperative women start saving for retirement early in their careers and concentrate on putting a bigger portion of their salary into a retirement savings account. Check to see if your employer offers a 401(k) match and if so, put in the maximum amount so you meet that 100 percent match. You can also start putting money in IRA's, gold, or the stock market. The sooner you start to utilize these savings options, the more money you can realize over the years. Don't sit back and rely on your spouse's retirement savings because if you live longer than him it may not last long enough for you.