Women face enormous challenges in their pursuit of a financially secure retirement. The math verifies that we must do a better job for our female prospects and clients.
Let's be honest. It is very clear that women are still trying to overcome discrimination that men never encounter. Studies have shown that women are only paid 77 percent of what a man is paid for equal work.
This impacts women's' Social Security benefits. And they receive fewer benefits because they have earned less and therefore paid less into the program.
But there are other obstacles for women that do not involve discrimination that are just as dangerous to their financial well-being.
Women play an irreplaceable role in society as caregivers. When they have children, many women choose to leave the workforce temporarily or reduce their schedule to work part-time. The work they do caring for the children is enormously valuable for their families and for society. But because they are not paid or even given credit for these contributions, they receive fewer credits towards Social Security qualification and have less earnings applied to their Social Security ledger.
Additionally, women are more likely than men to leave the workforce to care for disabled or elderly parents. Although they are not paid, this is a vital contribution to the financial well-being of our country.
Without this caregiving benefit, those people would have to be cared for by governments that do not have the money or the inclination to provide benefits and tend to a population that will increase to between 80 and 100 million elderly people. Nonetheless, these women do not receive any credit toward earnings applied to Social Security's calculation of benefits.
Exacerbating the problem is the simple fact that women live longer. If a woman reaches the age of 65, her life expectancy is almost three years longer than a man's.
Here is the punch line: Even though they live longer, 80 percent of women take their Social Security at age 62 — when it provides the least benefit. That election also reduces their cost of living increases because they started with a smaller amount. Compounded over a lifetime, this turns out to be quite a lot of money that they never receive.
A recent study clearly showed this shortfall. Forty-five year old men were found to be $212,000 short of what is required to achieve a secure retirement. That is a pretty large number.
