![There is a retirement gap in the US, and women are saving much less 1 There is a retirement gap in the US, and women are saving much less](https://www.trendfeedworld.com/wp-content/uploads/2024/05/There-is-a-retirement-gap-in-the-US-and-women.jpg)
American workers have serious catching up to do when it comes to retirement.
In the United States, the “retirement savings gap” – the difference between what someone thinks they need to retire comfortably and how much they currently have – is growing rapidly. But among women the gap is even wider.
In 2020, the American worker's “magic retirement goal” was $951,000. In the five years since, according to a new one study by Northwestern Mutualthat number has risen to $1.46 million, at a rate of increase that exceeds inflation.
Meanwhile, the average amount Americans have saved for retirement currently stands at $88,400.
The pension gap affects women disproportionately
However, there is an even more pressing pension gap in American society, and like many of the other gaps, this pension gap disproportionately affects women. While dollars and cents may seem arbitrary on the surface, in reality, retirement outcomes are anything but gender neutral.
a Goldman Sachs report Earlier this year, it emerged that 28 percent of women are saving less than $50,000 for retirement. That means one in four women live on a measly $2,000 a year.
This in turn increases women's dependence on Social Security benefits, but in a cruel irony, women receive on average 22 percent fewer Social Security benefits thanks to yet another gap: the discriminatory pay gap. What makes matters worse is the lack of earnings among women caused by part-time work patterns imposed by the women caring responsibilities.
Another reason why women retire and have less to live on is the fact that they do so often retire earlier than their male cohorts, and often unexpectedly, without the required financial planning in place. Moreover, women live an average of five years longer than men, so their already tight pension funds have to stretch even further. Together, these differences mean that women, who make up more than 50 percent of the U.S. population, retire 24 to 30 percent less than the remaining 49.49 percent.
So what can be done to close the gap?
Not all solutions lie with the women themselves; this isn't just about changing a mindset or monthly habits. To level the pension playing field, the government must address provisions for part-time workers, as well as better help with long-term student loan debt. Such measures would positively benefit women.
Look at the pros
One self-empowerment measure that could change women's fortunes is hiring a professional retirement advisor: a small investment that can make a big difference in the long run (some employer retirement plans offer this for free).
A professional can advise on investment management strategies and the use of target date funds, which tailor investments to an expected retirement date and are generally suitable for women, who tend to be more risk-averse and present-oriented than men.
Another powerful measure to improve your retirement prospects is to understand the power of compound interest. If you are in the early stages of your career, start your plan as early as possible and automate your contributions.
And finally, don't delegate your financial planning. If you are a woman and in a relationship where your partner handles the bills and accounts, reclaim your retirement planning for yourself. Statistically speaking, there is a decent chance that you will outlive your male partner, but either way you will never regret having had an impact on your own retirement outcome.
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