Challenges women face on the road to financial security

Challenges women face on the road to financial security

Nancy LeaMond is AARP’s Advocacy and Engagement Manager.

Across the country, women of all ages are falling behind their male counterparts on the path to secure retirement.

  • From the start of the pandemic through December 2021, women accounted for nearly 60% of our country’s 3.6 million net job losses.
  • About 1.1 million women left the labor market completely.
  • 1.8 million After women were underemployed or worked fewer hours than they would like.
  • Meanwhile, in December 2021, more than a third of unemployed women had been out of work for at least six months.

Taken together, these challenges have serious economic implications for older women today and generations of young women in the years to come.

But women’s long-term financial insecurity is not a new problem. The pandemic is only accelerating a crisis that has been going on for decades.

To better understand what’s going on, let’s look at the barriers women face at different points in their lives:

The first occurs as soon as she enters the labor market.

When a young woman gets her first job, she often earns less than her male counterparts. This pay gap between men and women persists and worsens over time. Overall, women earn an average of 82 cents for every dollar earned by men, and the gap is even wider for black and Latina women (62 cents and 54 cents, respectively). Smaller paychecks make it harder to cover day-to-day expenses, which means there’s less left over to start saving for the future.

Fast forward a few years and it’s time to start a family.

Partly because childcare is so expensive, many women are “leaning in” – cutting back on their hours, foregoing promotions or other opportunities, or dropping out of the workforce altogether. . Financially, this decision has knock-on effects. Reduced income again leads to lower savings. And later, this will result in lower Social Security benefits since these are based on lifetime income. If or when she decides to return to her current full-time job or re-enter the workforce, she is now years behind her male colleagues in terms of position, income and savings.

For this reason, many women still struggle to catch up when they become caregivers again, this time for aging parents and other adult relatives.

On average, “second wave” caregivers spend 24 hours a week – the equivalent of an unpaid part-time job – doing everything from driving to doctor appointments to managing medications, preparing meals, and managing financial and legal issues. In other words, just as she reaches what should be her career peak in terms of salary, she is again forced to cut back or leave the workforce.

A woman in this situation could lose $120,000 in lifetime earnings if she reduced her hours of work and $142,000 if she stopped working altogether. On top of that, women caring for adult loved ones spend an average of 27% of their annual income on care-related expenses.

After all, if she tries to re-enter the workforce while in her 50s or 60s, she may face the triple whammy of age, gender and – for women of color – discrimination. racial.

A recent survey indicated that 76% of women say they have experienced or witnessed age discrimination in the workplace, and gender biases only compound these difficulties. Many older women find themselves underemployed, working and earning less than they would like, working on demand without benefits, or never returning to work.

Taken together, when women reach retirement, this all translates into lower incomes, less personal savings, and lower social security benefits.

However, women on average live longer than men and have higher health care costs in retirement. And nearly half of women over 50 are single, so they bear the economic burden alone. The bottom line? Those numbers just don’t add up. At any age, women are more likely than men to live in poverty, and the gap widens after age 75.

So what can we do?

The women have made great strides in improving their financial situation, but they need help, and they need it now. To make this road less daunting, we need to:

  • First, reducing gender pay inequalities and create paid leave and other caregiver-friendly workplace policies so women can balance work and home responsibilities.
  • And we have to strengthen social securitythe foundation of retirement funding, for millions of women aged 65 and over.

These are good first steps in putting women and their families on a stronger financial footing.

Sarah J. Greer