While the Equal Pay Act was signed into law by John F. Kennedy in 1963, and many today push to see distinctions between men and women as so irrelevant that we should eliminate gender based pronouns like ‘he’ and ‘she’ in favor of ‘they’, it is critical to be aware of the very real differences between the sexes as we retire in America.
Women, specifically, have several life areas which cause their financial burden to significantly outpace those of a similarly-aged male. As the sex that physically bears children, this science often causes a natural interruption in their economic work, even for those that are determined to return to work immediately. When more than one child is involved, this interruption is compounded. While many women routinely return to their pre-child work schedule quickly, numerous others happily choose to take an extended leave of absence while their children are young, further extending earnings interruptions.
Along this same line is another natural earnings interrupter. As the gender that has been the historical caretaker in the family unit, many women also suspend work to care for an aging or sick parent when assisted living facilities are not desired or are financially unfeasible. This absence can add several additional years of an earnings pause. When you combine these earnings interruptions with a gender pay gap that still exists, a comparatively lower Social Security benefit, as well as smaller private retirement account balances, are an almost certainty.
In addition to these working-years differences, there are two other areas that make retirement financial needs for women comparatively larger than that of men and these are both a matter of biology. First, women naturally live longer than similarly aged men, a mortality fact recognized in every actuarial table since the first one. According to the AARP Public Policy Institute, more than two-thirds of Americans over age 85 are women. As women marry men their age or even a few years older, their probability of outliving their spouse and becoming a widow is very high. The financial burdens that befall both female and male widows alike, as they go from a two-person-income household, two social security payments for example, to one, can be a difficult monetary transition. However, given that women are significantly more likely to be widowed than men, this additional financial concern is more often borne by women.
And while we women live longer (and alone), we also live more sickly in our later years, something referred to as morbidity. This state of living longer but with more health issues creates the added financial burden of chronic long-term health care needs. These range from home-health assistance with the activities of daily living, to assisted-living facilities as they become necessary, and even full blown 24/7 nursing home care (where more than 70% of nursing home residents are women, according to AARP).
So, while many are currently pushing to merge gender differences into non-existence, when you sit down with your financial advisor/planner to come up with a long-term workable plan, make sure that they recognize these very real differences between the sexes and plan for your needs accordingly.
*Ms. Walser’s article was published in Fox Business! Check it out here – https://www.foxbusiness.com/personal-finance/what-women-cannot-ignore-about-retirement. Browse our website to learn more about our wealth management expertise and services.
