Translating retirement dreams to reality could be challenging-especially for girls, who often need to overcome particular, gender-specific hurdles to reach financial security. These challenges include lower average earnings, child custody and support, elder care and longer life expectancies than men.
This collection of articles explores these exceptional gender-based issues to help women become more educated about financial and retirement planning. As more women have entered the workforce and their pay moves toward parity with men, women today have more opportunities to save and invest for retirement. But only increasing women’s financial power won’t necessarily lead to a higher quality of private retirement planning, greater participation in retirement programs, a greater rate of savings or smarter investing.
Women live longer-Statistically, women outlive men by an average of about five decades. This suggests they will need to save more because they will have more years of retirement to fund. Women save less-The women’s median contribution rate is 6% vs. 8% for men, according to the Ninth Annual Transamerica Small Business Retirement Survey (September 2008), even though the savings rate for both people falls short of the minimum recommended 10%. Only 10 percent of the girls surveyed reported household retirement savings in over $100,000, compared to 29 percent of men.
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Women begin saving later-Women postpone retirement saving later in life than men, so that they have fewer years to collect a retirement nest egg. Women have less to invest-Generally, girls have less to invest because, normally, they earn less than men. The poverty rate for all older women is 13% based on the U.S. Census Bureau in 2008. However, the University of Michigan Retirement Research Center (May 2003) found that for widows, divorced and never-married girls, the rate jumps to over 18 percent.
Too many rely on Social Security as their sole source of revenue. Next, you’ll find out more about the pay differential between men and women-one of the significant financial challenges facing women as they plan for the future. Despite significant achievements in the workplace, many women continue to be at a disadvantage when it comes to earning power. Regardless of what measure is used, women’s earnings generally remain below those received by men. According to the U.S. Census Bureau, the median earnings of fulltime male employees was $43,460 in 2007. By the same measure, the median income for women was $33,437. But the gap between women’s and men’s earnings closed marginally. Women’s careers are interrupted more frequently for childbirth, childcare or elderly parent care. Even girls who gain entrance into high-paying jobs can be subject to these demands on time and attention.
Smaller businesses with smaller payrolls typically employ more women than men. Fewer women than men are union members. More women than men choose not to work outside the house. For all these reasons, it can be particularly crucial for girls to become educated about retirement and financial planning programs-and to take part in employer-sponsored retirement programs. Next, we’ll talk about the competitive requirements that many working girls face-and frequently face alone: the care of children and older parents.
Women’s traditional role as caregivers for both children and older family members frequently impose special financial hardships and make it even more challenging to put aside money for the future. This is particularly true for women that are custodial parents, dependent on child support payments that may or may not be forthcoming. According to the 2005 edition of Child Support for Custodial Mothers and Fathers, a U.S. Census Bureau report, an estimated 13.6 million parents had custody of children under 21 years old.
And five of every six custodial parents were girls. Custodial mothers are more likely than fathers to work part time and have the greatest need for child support. Yet, the Census Bureau study found that one of the more than 11 million custodial mothers, just 2.9 million were getting the full amount of their court-ordered child support obligations. Clearly, the unsupplemented burden of household and child support drops more frequently to women with single incomes-a fact that could have a disastrous impact on retirement-planning efforts.
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Nearly one in four of the country’s households is involved in caregiving to family members or friends aged 50 or older. And about 75 percent of these caregivers are women. The BPWF report also said that 27 percent of all caregivers are daughters of those receiving the care, which female caregivers spend 50 percent more time providing care than male caregivers. Further, according to the BPWF, used caregivers are more likely to miss work, lose a job or career opportunity or experience other negative economic outcomes. And then there’s the direct financial effects.
Elderly people living on a fixed income may have more trouble paying utility bills, medical deductibles, nursing home bills or home health care costs. When the older parent runs a bit short, the caregiver may be asked to make up the shortfall. Again, this can decrease the amount available to save for retirement. Financial planning starts with becoming educated about key financial issues. That’s not as hard as it may sound, because it only takes a while to read up on financing in dozens of private financial management books and magazines available on the market.
These publications explain the advantages and disadvantages of investments like mutual funds, variable annuities, certificates of deposit (CDs), money market funds and other investments; savings programs like workplace retirement plans and Individual Retirement Accounts (IRAs); and the idea of risk management through long-term and life care insurance. Next, acquire an understanding of money management. This involves tracking your checkbook, determining where your money goes each month, and finding ways to decrease these outflows should they exceed your income. Budgeting is the most fundamental, most effective method to sort out equilibrium income and outgo, identify expenses which will need to be reduced and offer a framework for managing your own finances. This procedure can help you ascertain how much money you will need in retirement and make decisions about how to begin accumulating that money.