The gender wage gap is a persistent problem that’s taking a long time to solve. The fact is that on average, women earn about 78 cents for each dollar brought in by men. And, new data suggest that this is having a significant effect on the state of women’s finances in retirement.
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Let’s take a look at some facts about the gender wage gap and its impact on women over the age of 65.
The impact of the pay gap lasts a lifetime. Due to more time spent out of the workforce, less access to retirement savings plans, and a lifetime spent working for lower wages, women in retirement are twice as likely to live in poverty as men.
Women over 65 rely on an average income of around $16,000 a year. Men, on the other hand, have more than $27,000 a year to work with, according to a congressional analysis of census data. Social Security benefits, which often make up the exclusive income of retirees, could be partially to blame along with the fact that women live longer on average than men.
“You combine lower resources with longer life expectancies and very quickly you can identify that there is more risk here,” said Dave Littell, retirement income program director at The American College, an institution focused on educating financial planners and advisers.
Even when considering professions that are historically female-dominated, the wage gap is notable. For example, women hold more than 70 percent of elementary and middle school teaching jobs, but men earn a median salary of $1,096 a week, while women earn $956. In retail sales, the gap is even more significant. Women earn 70 cents to the dollar for this work. And, among full-time working lawyers, women earn 83 cents to a man’s dollar.
There is even some evidence that the gap begins in childhood. Over the course of a lifetime, the pay gap really starts to take a toll, and by the time retirement comes around, women are left in a much worse financial situation than men who worked in the same field.
3. Employers need to take responsibility for this, and government policies should be adjusted.
While many aspects of retirement are impacted by government policy, employers need to take a closer look at how the wage gap is impacting their female employees post-retirement and make strides to adjust their salaries and benefits accordingly.
Senators Patty Murray (D-WA) and Mark Begich (D-AK) introduced the RAISE Act (Retirement and Income Security Enhancement Act) last year as a way to enhance and protect the social security system. The RAISE Act would strengthen benefits for struggling seniors, most of whom are women. It would also sure up social security to ensure that future generations will continue to receive benefits by asking those who can afford it to pay more.
The wage gap starts early, persists through years of employment, and continues to have an impact when it’s time to retire. The shocking statistic that twice as many women over 65 live in poverty than men should serve as a wake-up call to those who continue to underestimate the importance and impact of the pay gap.
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