The gender gap and retirement
7 risks to women's savings—and how to mitigate them
Key takeaways
- Women need to save differently for retirement.
- Factors such as longevity, the pay gap, the investing gap, and caregiving can lead to less in retirement savings.
How much money you’ll need in retirement will vary based on factors like what your expenses will be, how much you can save, and how long you’ll be retired. But that’s not all that women have to take into consideration—there is a very real gender gap in retirement. This means that women are more likely to need more money for a longer amount of time.
What's different for women?
The fact that women are often paid less than men in comparable positions might not be a surprise. But there can be other pay gaps too, specifically for women of color and mothers. And when women are earning less in salary, it snowballs when it comes to retirement—since most people save a percentage of their income each paycheck for retirement. If you're making less, then the total amount you're putting into your retirement is lower. Not only is the contribution amount potentially lower, but over time, there is a likely impact to the potential for compounding growth.
What to consider: If possible, save more for retirement; even 1%–2% more each month can make a difference. Should you be able to max out your mandatory Tiers 1 and 2 contributions, you can continue to save each in a separate retirement account such as the PenTrust She Retires pension plan for women. However, remember that it's not the percentage that matters as much as making sure you have enough for retirement, so talk to a financial professional about having a plan and tracking toward it.
SOURCE: FIDELITY.COM/FIDELITY VIEWPOINTS / PENTRUST LIMITED