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How COVID and Gender Inequality Is Destroying Retirement for Women

How COVID and Gender Inequality Is Destroying Retirement for Women

September 15, 2021

The COVID-19 pandemic has quietly changed the face of retirement, effectively altering the retirement plans of about 69 million Americans.1 For women, COVID has intensified many of the threats to women's retirement plans. (Think lower lifetime earnings and higher unemployment rates for women.) The result is a crushing blow to women's retirement futures. We have outlined how gender inequality and the pandemic have created a dangerous mix for female financial security: and what to do about it. 

The Gender Pay Gap

Even before the pandemic, women had to worry about saving enough for retirement. And for good reason: women typically earn less than men and, in turn, have lower lifetime savings rates. If a man and woman both work full-time from the ages of 23 to 65, because of the gender pay gap, a woman will typically earn about $469,000 less.Lower lifetime earnings = lower retirement balances. It's worth noting that women’s retirement account balances are typically only worth about two-thirds, 67%, of men’s balances.1

The most devastating, and least mentioned, blow to a women's retirement fund: women receive Social Security benefits that are, on average, 80 percent of those men receive.3 Why is this important? Because Social Security is a major source of income for most retirees.

How COVID Has Deepened the Gender Pay Gap

As the pandemic continues and many women are strained financially, losing or leaving their jobs, or struggling to keep up with their jobs due to working from home, the gender gap is widening. It's an unfortunate truth that women are less financially secure now than they were before the pandemic.

Forbes found that there are significant differences in Covid-19’s financial impact by gender, with 23% of women ending up short financially each month compared to 14% of men.4 Lower salaries and Social Security benefits already make it harder for women to save for retirement, but the recent pandemic has created a compounded stress on retirement savings for women.

How COVID Has Shaken Our Confidence in Retirement

During the pandemic, 41% of women say they’ve been able to continue to save for retirement on a monthly basis, compared to 58% of men.1 A lack of savings may be a large part of the reason women's confidence about their retirement savings tanked during the pandemic. 

The chart below illustrates the different in retirement confidence for men and women. Both hit men and women hit a low at the beginning of the pandemic. However, while men's are on the upswing (at about 56% confident at the end of March,) women's remain low. By the end of March 2021, only 42% of women report they are confident in their savings.

Note: Data based on share of U.S. adults planning to retire; Source: Edward Jones and Age Wave 2021 as cited in CNBC, June 16th, 2021 

In essence, men’s confidence that they’ll be able to retire when and how they want is on the mend, yet women’s confidence in their retirement savings took a nosedive during the pandemic and hasn’t fully recovered.1That makes sense when you consider that women’s unemployment rates were higher than men’s throughout the pandemic and many of the sectors hardest hit by Covid-19 shutdowns employ more women than men.  

What Women Can do to Secure Their Future

For women who feel behind in saving for retirement, the first step is to be aware the problem. (If you're retired and concerned about your retirement income, use our free retirement checkup questionnaire.) The second step is to identify specific actions that you can take. If you're feeling unconfident in your plan, we would recommend working with a financial professional. Research shows that a written financial plan increases confidence. Those who have a financial plan generally have more confidence and typically have more success achieving their financial goals.

Whether you decide to work with an advisor, we will let you in on a couple of crucial investment strategies that we generally employ for women over the age of 50.* Here's what we do differently:

  • Develop low-risk growth strategies aimed to help women take control of their finances.
  • Take an empathetic approach to communication. We want to listen and allow you to take the reigns. It's your future, take control of it. 
  • We want you to be part of the process. We aim to guide your decision-making so that you leave our office feeling confident about your financial decisions.
  • Allow our clients to view their accounts online 24/7.  

A financial plan may sound like a chore. But for successful investors, it’s the foundation on which to build, understand and achieve your goals. 

Recovering from the setbacks women have experienced is going to take everyone working together. If you need help with your plan, let us know. We would be happy to review your current savings and point you in the right direction. Get started with us today!

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*The information provided is for general information only and may not be applicable to your specific situation. This is not an offer to sell securities and should not substitute proper legal or tax advice. For personalized recommendations, we suggest working with us or another registered investment advisor. 

1. CNBC, June 16th, 2021

2. Edward Jones, June 2021

3., July 2020

4. Forbes, April 2021

5. Charles Schwab, September 2021