“The nation was facing a retirement saving crisis even before the COVID-19 financial crisis, , with women already at a significant disadvantage.,” Lawrence Castillo

Women, especially divorced and widowed women, face a series of complex hurdles when it comes to being prepared for retirement.

For example, many women in the workforce experience an earnings trajectory that makes them substantially less than their male counterparts. In addition to earning less money, women generally outlive men and have to plan for more years without income.

Because of this pay gap, women tend to contribute significantly less to their retirement accounts and savings. The earnings gap then turns into a shortfall of retirement income that can result in running out of money before they die.

Several factors are influencing the earnings gap, including the role of caregiving. Women frequently assume caregiver roles, first as mothers, and later as wives who must care for their elderly parents, in-laws and spouses.

They do this much more frequently than their male counterparts (more than 60 percent of caregivers are women) and often during their prime earning years.

Recently, the National Institute on Retirement Security published a study indicating that caregiving has a more profound effect on a woman’s retirement preparedness than we ever believed.www.nirsonline.org/reports/stillshortchanged/

The study indicated that the income gap translates into a challenging retirement. Median household income for women in their retirement years (65 and older) is only about 83 percent of that of men in the same age group. When you consider additional factors, such as divorce and widowhood, it’s easy to see that the American retirement crisis affects women in a shockingly disproportionate way. American women are living longer in retirement with a lot less money.

What does this mean for you or the women in your life?

According to experts, 50 percent of women who choose to stay at home to take care of their families have no plans for retirement. This lack of planning means that they will be even more dependent on Social Security.

Social Security has multiple issues, as we all know. One of them is that the current configuration of Social Security often penalizes dual-income earners.

Policymakers, faced with a crisis, are scrambling to find solutions to this issue, such as adjusting current spousal benefits and crediting people for time spent as caregivers. There’s even talk of creating a universal savings vehicle that would allow more women to save for retirement, whether or not their employers offer 401k or other plans or providing more paid family leave for caregivers.

But all these changes take time. The COVID-19 pandemic is forcing Americans to realize just how critical having multiple sources of income is, both in the short and long term.

The pandemic has shone a light on our retirement system’s fragility and the rapidity with which things change. You cannot rely on the government, your spouse, or your employer to provide for you when you can no longer work. For women, it’s critical to start saving and protecting wealth as early as possible.

Educate yourself about the most effective strategies to create multiple streams of income in retirement. This involves understanding the kinds of products best suited to your unique situation. You must partner with a qualified and trustworthy financial professional who can explain your options and help you clarify your goals.

Sound retirement planning isn’t “for men only.” Even if you feel you don’t make enough money to save, or that your spouse has things under control, it’s good to seek a qualified income and retirement advisor to review your plan. Always get a second opinion.

(Lawrence Castillo is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management. L and C Retirement Income Planners, 4801 Lang St. NE Suite 100, Albuquerque, NM, 87109, 505-798-2592, lawrencecastillo.retirevillage.com)

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