4 Reasons Women Need More Money Than Men in Retirement

Whether we want to admit it or not, men and women have it differently, no matter what aspect of their lives we are talking about. Retirement is no exception. Apart from the retirement age, there is something else that is different when it comes to retired men and women. Women need more money in retirement, compared to men.

Why is that? It’s definitely not because women spend more money. Take a look at some of the reasons women do not have enough funding to live their golden years the way they want and should. While you’re at it, you can also learn how to solve this major problem.

Why do retired women need more money than men?

As explained by financial experts, women don’t have a different mindset than men when it comes to investments and savings. Both categories know that a peaceful and financially stable retirement depends on how you use and save your money during your working years. What’s different is that women have to overcome many more obstacles than men when planning for their golden years. These are the most important ones:

1. Career interruptions

According to statistics, women are the ones who take more time away from work than men, to take care of their children, older parents. As revealed by the Pew Research Center1, only an estimated 2.1 million fathers stayed at home to take care of their children in 2021. In percentages, this translated to approximately 18 percent.

When it comes to women, the statistics provided by AARP show that 66% of women have taken a break from work to focus of caring for others. Such a break can have a serious impact on a woman’s career and subsequently retirement savings. Lack of work means lack of salary, therefore no employer-matched retirement savings or Social Security benefits.

“Women who have children tend to be pushed out of the labor market because of their childbearing needs”, says Kaitlin Walsh-Epstein, the chief marketing officer of student refinancing company Laurel Road. Returning to work after a long time can also affect a woman’s career. It can adversely impact her earning potential, consequently lowering their retirement savings.

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2. The gender pay gap

According to statistics provided by Pew Research Center, women made approximately 83% as much as men in 2022. In 2002, women made 80% as much as men.

Not having the same income as men can affect women’s finances in the short term but also in the long run. When it comes to retirement, not earning as much throughout your working years can affect your possibility to put money aside for a relaxed retirement. The recommended amount to be saved for retirement, as advised by Fidelity, is 15% of one’s pretax income for each year of retirement.

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Unfortunately, a lower paycheck might not give women the possibility to save this much for their golden years. Even if they do succeed in putting that 15 percent aside, it still doesn’t amount to what their male counterparts save for their retirement years.

In addition, Social Security benefits are closely related to one’s income throughout their working period. As revealed by the Social Security Administration, the average annual Social Security income for women, in 2021, was approx. $ 14,204. Men, on the other hand, received an average annual social security income of $18,108.

“If you’re being paid 84% on the dollar, your 6% contribution to your 401(k) doesn’t go as far as your male counterpart’s 6% contribution,” explains Walsh-Epstein. “The pay gap is systemic but it also continues to escalate when you think about women saving for retirement.”

3. Lower chances of saving for retirement

As explained by Fidelity, around 69% of women are saving for their golden years, as opposed to 77 percent of men. Sadly, women are not very optimistic when it comes to their financial future, with only 42% of women being confident that they can rely on their retirement savings, compared to 53% of men.

Apart from the gender pay gap and the fact that women interrupt their careers to take care of others, there are also many other reasons why women cannot save for retirement as much as their male co-workers do. For these reasons, women are more worried about retirement and about having to find extra income sources in retirement to make ends meet.

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4. Longer life expectancy

No one knows how long they will live and for how long they will be able to enjoy their golden years. But, compared to past years, people all over the world live longer. More than that, according to statistics, women live longer than men, which means they might get to enjoy more of their retirement than their male counterparts.

“Women are generally more likely to engage in health-seeking behaviors,” explains Dr. David Cutler, a family medicine physician at Providence Saint John’s Health Center in California. “They often visit doctors regularly, adhere to medical advice, and get involved in preventive healthcare measures. This proactive approach to health may contribute to early detection of diseases and better management of any diagnosis to avoid premature illness and death.”

According to the Centers for Disease Control and Prevention, the life expectancy of women was 79.3 years in 2021, as opposed to men whose life expectancy was 73.5. Financially speaking, more years of life require more money to maintain their standards of living.

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