Retirement planning for women is so different than how it works for men.
Reason 3: Women are in and out of the workforce more than men.
This is the final article in my series of three articles: #1 Covers women living longer than men, and #2 Covers the fact that women make less than men.
In part 3 of my miniseries on why financial and retirement planning are different for women than for men, I’d like to talk about the fact that women, more often than not, go in and out of the workforce. Most men do not.
Despite the critical differences between the average man and woman, the traditional financial planning industry does not account for the fact that retirement issues are very different for women. In this series of posts I’ve previously discussed two of the primary reasons for this difference:
- We live longer than men.
- We make less money than men.
I’d argue the third-largest reason to treat women’s retirement issues as unique in comparison to men’s is that: Women are in and out of the workforce more than men. We remain the primary caregivers to family members. Very often women are the ones to transition in and out of the workplace due to family demands, such as the care of kids, aging parents, and/or other loved ones.
The pandemic has set retirement planning for women back
The U.S. Department of Labor reports that the COVID-19 crisis has intensified this disparity, noting:
“The pandemic has set women’s labor force participation back more than 30 years. Unfortunately, the pandemic stalled gains made toward closing the pay gap, and layoffs and a lack of child care have forced many women out of the workforce entirely. In February 2021, women’s labor force participation rate was 55.8% – the same rate as of April 1987. And women of color and those working in low-wage occupations have been the most impacted.”
Many women also want to have children. Which at first can be a challenge. That said disruptions in workforce participation quite obviously lower women’s earnings during their absence from paid employment.
Breaks from the workplace most often also disrupt a woman’s career trajectory (and therefore earnings), resulting in less cumulative money earned over our entire working lifetime. That’s less money to save or invest for future retirement needs.
Making less money also immediately impacts the calculations used for Social Security and workplace retirement plans. Again, the result is less money earned toward our future
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As a financial consultant, specializing in the financial needs of women, Kathleen Connors understands that you want to work with an adviser who is relatable and trustworthy. She focuses on life’s unique goals and takes the time to educate her clients about their financial future. Kathleen is passionate about helping women reach clarity and confidence around their finances. It doesn’t matter where a client may be within their life’s journey. Kathleen brings warmth and compassion to the financial planning process, with no judgments.