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Did you know women make up half the U.S. labor force and 51% of its population? Women also earn 79¢ for every $1 earned by a man. 20% of the seats in both the U.S. Senate and the House of Representatives are currently held by a women. Is it any wonder that gender parity is the theme of the March 8 International Women’s Day? It doesn't stop there, International Women's Month is all March long.
There’s another way women lag men: they are less financially prepared for retirement, according to the report Sixteen Facts About Women’s Retirement Outlook, issued by the Transamerica Center for Retirement Studies®. “Women in the 21st century are better educated and enjoy career opportunities that our grandmothers’ generation could only dream about,” says Catherine Collinson, president of the Center. “However, even in 2016, a woman’s ability to achieve a secure retirement is filled with obstacles, such as lower pay and time out of the workforce for parenting or caregiving, which can negatively affect her own long-term financial prospects.”
Let’s look at five of those 16 facts and what you might do better:
1. Most (64%) Baby Boomer women do not have a backup plan if forced into retirement sooner than expected. An Individual Retirement Account can be a lifesaver, especially the closer you get to retirement age. After age 59½, you may withdraw money from a Traditional or Roth IRA with no tax penalties.
2. Nearly half (46%) of women expect their 401(k) or other retirement savings account to be their primary source of income in retirement. However, 28% of women work part-time, so are less likely to have workplace retirement benefits. This makes it all the more important for women to take charge of their own retirement savings.
3. More than half (53%) of women are saving for retirement outside of work in an IRA, with investments in mutual funds, or savings accounts. When you save in an IRA, you save twice: once in the amount you put away and twice by not having to pay taxes as your saved assets grow.
4. Women estimate they will need $1 million in savings to feel financially secure in retirement. But 62% of the women surveyed admitted that $1 million figure was just a guess. Instead of guessing, try completing one of the retirement calculators available online or make an appointment with a financial advisor to plan your retirement saving strategy.
5. Most women (52%) say they would be more motivated to learn about retirement finances if the information were easier to understand. The Entrust Group agrees. Our online Learning Center offers a range of information that is easy to understand and act on.
Read the entire Transamerica Center for Retirement Studies report on women’s retirement prospects.