We recently celebrated International Women’s Day 2019 embracing this year’s theme of Balance for Better. As we continue our Women’s History Month celebrations throughout March, it’s important we expand upon the quest for balance and gender equity to include retirement equity, too.
In several papers published by the World Economic Forum (WEF), such as their 2017 paper, “We’ll Live to 100—How Can We Afford It?” and their 2018 paper, “How Can We Save (for) Our Future” the gender pension gap for women is explored. These papers and additional studies give readers an appreciation of the unique challenges faced by women when it comes to retirement readiness.
The WEF research reveals that the gender pension gap is higher for women because they have lower financial security in retirement. Retirement account balances for women across the globe are 30-to-40 percent less than those for men. There are several explanations for women having a retirement savings deficit.
First, women participate in the workforce fewer years than men do because oftentimes they take breaks to start a family or care for a loved one. The Pew Research Center found in a 2013 survey that mothers were more likely than fathers to experience significant career interruptions to attend to their families’ needs. According to the Family Caregiver Alliance, Women and Caregiving: Fact and Figures, 2015, 61 percent of caregivers in the United States are female and the average woman takes 12 years out of the workforce for family caregiving.
Secondly, when compared to men, women work in part-time positions more. According to the Women’s Bureau of the US Department of Labor, in March 2015, mothers with children under age 18 were five times more likely than employed fathers to work part-time (24.7 percent versus 4.8 percent, respectively). Since individuals generally save for retirement when they are working, it is no surprise that if women work less over their lifetime than men, they will have less money saved for retirement.
On top of working less, there still exists a gender pay gap. According to the U.S. Department of Labor, the average woman’s unadjusted annual salary has been cited as 82 percent of the average man’s. Earning less naturally yields lesser retirement savings comparably, since savings are generally a function of one’s pay.
Further adding to the retirement inequity, women on average live longer than men. According to the Society of Actuaries, women outlive men by 3-to-4 years on average. Women living longer has a significant impact on their retirement readiness. If both a man and woman have the same amount saved for retirement, that amount equates to less over a woman’s lifetime, generally speaking, because she will be drawing down the same amount over a longer period.
As New York City’s Chief Actuary, female retirement readiness concerns me as a societal issue and as an issue that is close to my work of making sure New York City’s pensions are properly funded. Knowing that I am caring for the retirement needs of so many females in New York City (the 2017 Workforce Profile Report produced by the New York City Department of Citywide Administrative Services notes that more women than men work for New York City: 59 percent versus 41 percent, respectively) compels me to highlight the real challenges faced by them and all women, especially as we commemorate a month dedicated to women and their causes.
Supporters and organizers of the International Women’s Day 2019 want us to build a gender-balanced world. One way we can do that is help women prepare better for retirement. We can only do that if we first recognize the unique aspects of women’s lives that can prevent them from properly preparing for their golden years. Let’s keep talking about this now and beyond Women’s History Month.
(Editor’s Note: Ms. Chan is New York City’s Chief Actuary)
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