Only 19% of women are confident they are saving enough for retirement

Only 19% of women are confident they are saving enough for retirement

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The two years since the coronavirus pandemic led to sweeping shutdowns across the United States have hit women in the workforce particularly hard.

Today, the gap between their retirement savings and that of their male counterparts has widened even further.

Only 19% of women are confident they are on track to retire without running out of money, according to a TIAA poll that surveyed more than 3,000 adults. That’s compared to 35% of men, according to the survey.

In 2013, the gap between men’s and women’s perception of their preparation for retirement was 9 percentage points. The 2022 study showed the gap had grown to 16 percentage points.

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In addition, only 31% of women surveyed said they could save for their retirement.

“It touched me that only 1 in 3 women have the ability to set aside money for retirement,” said Shelly-Ann Eweka, senior director of financial planning strategy at TIAA. That’s compared to 44% of men.

Covid has hit women harder

The gap between what men and women have saved for retirement has long been documented and generally widens with age, according to the US Census Bureau.

In 2016, the median household income of women 65 and older was $47,244, including earnings and income from retirement, property, and Social Security, according to a May 2020 National Institute article. on Retirement Security. For men 65 and older, the figure was $57,144.

In 2022, women overall still earn about 83 cents for every dollar earned by a man, an even greater gap for women of color.

This affects women’s ability to pay bills and save for retirement. About 29% of women surveyed by TIAA currently struggle to pay their monthly bills, according to the study.

The pandemic has also kept many women out of the workforce, which often means they are not actively saving for retirement. Since 2020, about 2 million women have left the workforce, according to the US Bureau of Labor Statistics. When women stop working, that lost income can cause their retirement savings to generate 30% less income over time, according to the Organization for Economic Co-operation and Development.

“These are gains that will probably never be recouped,” Eweka said.

How to rebuild

Of course, you can take a break or save less for retirement because you lost your job or part of your income, or had some other change in circumstances. It is possible to rebuild your retirement savings.

“In the short term, it’s okay if you have to adjust,” said Marguerita Cheng, certified financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.

One way is to continue making all the contributions you can to your 401(k) or an Individual Retirement Account if you’ve lost your job and access to employer-sponsored plans, said Kelly DiGonzini, CFP , director of financial planning at Beacon. Pointe, an independent consulting firm in Newport Beach, California.

Any amount you are able to invest will grow over time.

If you work and have an employer-sponsored plan, be sure to take advantage of any matching offers offered, Eweka said. Many employers also offer financial planning benefits, which can help you see if you’re on track to retire when you want to, she said.

If you can’t save consistently, allocating a portion of windfall gains such as a tax refund is a good way to contribute to retirement, said Cheng, who is a member of the CNBC Advisor Council.

Women should also focus on spending and living within their means, said Shweta Lawande, CFP and analyst at Francis Financial, a New York-based firm dedicated to serving women, couples and those going through divorce.

“What we’re trying to share with our clients right now is to focus on what they can control,” Lawande said. While they can’t control lockdowns or the job market, they can make sure their budgets are airtight, she added.

Those with an existing portfolio may take some time to check their asset allocation to ensure they are invested in a diverse group of stocks, bonds, real estate, cash and more, a Lawande said, adding that this reduces the risks.

Working with a financial adviser, if possible, can also help women ensure they are on track to retire when they want to, and formulate a strategy for course correction if they are not.

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