You may have heard about the gender pay gap that exists between men and women. Simply put, it's when a man and woman share similar professional factors like educational background, amount of work experience, and hold the same position, yet the woman makes less than the man.
In 2014, full-time, year-round female employees were paid 79 cents for every dollar full-time, year-round male employees were paid. In Michigan, women were paid 75 cents for every dollar men were paid, according to a study from the American Association of University Women.
Not only are women more likely to earn less than men throughout their working years, but according to a report from the National Institute on Retirement Security, women are also far more likely to face financial hardship during retirement.
The report, "Shortchanged in Retirement: Continuing Challenges to Women's Financial Future," found women are 80 percent more likely than men to be impoverished at age 65 or older.
So, why is this? Well, the gender pay gap is a significant factor. Over a 40-year career, the pay gap between men and women adds up to an average of $430,480, according to the Census Bureau.
But factors like single parenthood, divorce, and medical expenses associated with longer life spans are also to blame.
These are women who raised children and cared for sick and elderly family members, often taking what savings and income they do have and spending it on things besides their own retirement security, according to The Associated Press.
Diane Oakley is executive director of the NIRS and report co-author. She said in a press release:
It is well documented that the nation faces a retirement savings crisis, but the pain is particularly severe for women because we need a bigger retirement nest egg than men thanks to our longer life expectancy. This new data is troubling—it shows that a woman’s nest egg is substantially smaller than a man’s and that we’re not making real headway toward closing the retirement gender gap.
The report suggests public policy solutions that "can help reduce women’s vulnerability to financial hardship as they age," including:
- Strengthening Social Security benefits for women;
- Increasing retirement plan coverage through auto enrollment in individual retirement accounts;
- Expanding utilization of the Saver’s Credit. Increased development of state-sponsored savings plans;
- Increasing defined contribution plan eligibility for part-time workers;
- Providing spousal protections in defined contribution accounts; and
- Expanding defined benefit pension plans.
According to report authors, these proposals will strengthen retirement security for women. Oakley says:
The fact that women over 65 are 80 percent more likely than men to fall into poverty in their retirement years is tragic and should be a call to action for policymakers. Women are financially disadvantaged because we still earn less than men and we typically take time out of our careers for caregiving – both of which reduce our ability to prepare for retirement. As a result, more women are spending their retirement years working.
You can read the full report from the National Institute on Retirement Security here.