Women and the Retirement Readiness Financial Gap

Published on June 12, 2018

Merrill Lynch, in partnership with Age Wave, released a study in April that reported on the savings and earnings levels for men and women on the road to retirement. Strikingly, the study showed that women still have a lot of work to do to close the retirement savings gap, in spite of the strides they have made professionally and financially. Forty-one percent of women surveyed said they wished they’d invested more of their money, and the cumulative gender wealth gap between men and women at retirement age is over one million dollars—$1,055,000. That means that a woman at retirement age will have accumulated $1.055 million less than a man.

The survey polled 3,707 American adults last fall, a little more than 70 percent of whom were women. Seventy percent of those women felt that women and men have fundamentally different life journeys, which affect earnings and savings potential. Borne out was the need to encourage women to invest more of their assets, start saving earlier for retirement, and pursue financial solutions that align with their personal values and life paths.

Those paths often include child care or caregiving for parents or a spouse, which disrupt the income stream and widen the gap in lifetime earnings (and in turn, savings and investment).  On the widening wealth gap, the survey revealed that:

• One-third of mothers who returned to the workforce after caring for children took on less demanding work at lower pay.
• Twenty-one percent said they were paid less for the same work they had previously done.
• The average woman is likely to have higher health costs than the average man in retirement because of her longer life and the likelihood of a greater need for formal long-term care in later years; Age Wave calculated this to be an additional $195,000 on average.
• The retirement wealth gap is exacerbated by women’s longevity. Forty-four percent of those surveyed feared they would run out of money by age 80.

Some good news: On the flip side, 77 percent of women who said they invested their money expect to accumulate enough funds to support themselves for life.

According to Merrill Lynch, women’s financial security goes beyond closing the wage gap—it also means accumulating assets at all income levels and taking control of their financial futures.

Closing the gender wealth gap by self-directing retirement savings

Women who are able to put money away in a retirement plan, and who are savvy investors, would do well to consider opening a self-directed retirement plan. By self-directing their investments, women can close the gender wealth gap by diversifying their portfolios beyond stocks and bonds to include a broad array of alternative assets. Taking control of one’s retirement savings, and including nontraditional investments they already know and understand, can help pave a positive path in life’s journey toward retirement.

We invite you to sign up for our monthly newsletter to stay abreast of what’s happening in the world of self-directed retirement plans or to find out about our educational webinars. Our white paper library also has helpful resources for investors who want to take control of their financial futures. To speak with a live representative, call us at 1-888-857-8058 or email info@nextgenerationtrust.com.