The Retirement Income Gender Gap

By Mark S. Gardner

Studies show that American women control $14 trillion of wealth and have life expectancy several years longer than previous generations. That’s the good news. Here’s the concerning news: women today also face lower lifetime earnings than their male colleagues and longer periods of disability. These factors, combined with inflation risk and reduced savings, contribute to a significant retirement income gender gap.

Prudential Research estimates that Social Security benefits for women are 23% lower than men. Even among wealthy households, the gap is alarming. In its latest survey of affluent clients, Wells Fargo found that the median retirement balance in women’s accounts is $500,000, compared with $700,000 for men.

The income gender gap puts additional pressure on women to save more, and it especially affects women who are widowed, divorced, or never married. Planning for retirement is a different process for women than it is for men. Let’s consider some of the factors which can influence women’s lives and put them at risk of outliving their retirement savings:

  • Family Life

Among those who have careers, women drop out of the workforce for an average of 11 years to care for children or aging parents, typically during peak savings years. If they return to work, it is often to lower-paying or part-time jobs. Any work departure or reduction affects Social Security benefits and employee pension plan benefits. It’s been estimated by AARP and others that caregivers who remove themselves from the workforce may lower their lifetime wealth by more than $300,000.  And that doesn’t even account for the lack of saving during those non working years.

  • Greater Financial Shock with Divorce or Death of a Spouse

According to an analysis of U.S. Census Bureau data by the National Institute on Retirement Security, life events, such as divorce, also disproportionately affect women’s retirement security. After a divorce or separation, household income decreased by an average of 41% for women in or near retirement, compared with a 23% drop for men. Becoming a widow had a similarly negative impact on women’s household income.

  • Longer Life and Longer Disability 

According to the Social Security Administration, today’s 65 year-old woman is expected to live, on average, until she is 86.6. On the other hand, a 65 year-old man today would be expected, on average, to live to 84.3. Women age 65 are expected to have 3.0 years of mild or moderate disability, whereas men are expected to have 1.5 years of disability. Thereafter, women are expected to spend 2.8 years with more severe disability, which can greatly impact their long-term care and healthcare expenses.

How much does retirement cost?

Retirement costs obviously vary depending upon lifestyle. According to the latest Bureau of Labor Statistics data, which is based on 2016 figures, “older households” — defined as those run by someone 65 and older — spend an average of $45,756 per year, or roughly $3,800 a month. A recent Merrill Lynch/Age Wave study found the typical retirement costs among their clients cost $738,000. Still, only 9% of American women have $300,000 or more saved. When asked, “How far into the future have you planned for financially?” one in four women ages 18 or older, and as many as 30% of women ages 30 to 44 say they have not planned at all for their future.

Planning for retirement is not as easy as plugging a few numbers into a calculator. As with most things, the devil is often in the details. Online tools are good at making simple predictions based upon a singular assumption, but an automated computer program will have a hard time weighing the complexities specific to you and your unique circumstances. For example, an online tool will not be able to estimate whether your budget is realistic, whether you’ve properly accounted for healthcare costs, or when you should file for Social Security benefits.

Don’t let complexity, shame, or shyness stop you from securing your wealth!

The world of finance is deliberately complicated. And if you think interest compounds, look how tensions escalate when people discuss money! Financial anxiety runs high in every tax bracket, and particularly among women. Consider working with a financial planner who will help you clarify your situation, set realistic expectations, and coach you towards a savings plan to help achieve your goals. A planner will also help you identify the levers to pull in order to match retirement income needs with resources, develop cash flow projections, and make adjustments to your plan as you progress towards your goal. Don’t be shy!

When polled for the 2015 Fidelity Investments Money FIT Women Study, 56% of women said they refrained from discussing finances because the subject is too personal; 27% said they were raised to not talk about finances; and 10% said they don’t understand or know how to talk about it intelligently.

Studies show that working with a financial professional leads to better outcomes, including more retirement savings, greater confidence, and overall financial wellness. Our mission is to understand your unique situation; to help make you aware of and knowledgeable about various options available to you; to help you navigate the admittedly complicated financial web of investments, taxes, and insurance; and to assist you in meeting and exceeding your financial goals and objectives.

Tips for Effective Retirement Planning

  • Enjoy yourself, but don’t spend your retirement savings on luxurious vacations, an extensive wardrobe, or even a new smartphone every year. Pay yourself first by saving for your retirement.
    • If you are married, structure a retirement plan that accounts not only for your time together, but also if you are no longer together. One spouse will most likely pre-decease the other. What then?
  • Consider future expenses (healthcare costs, living expenses, long-term care costs) and weigh the risks and potential factors which can increase these costs.
    • Think carefully before considering the withdrawal of retirement funds for your children’s college tuition. Work-study would be a better option for a young adult than an underfunded retirement for a disabled elderly parent.
    • Investigate different investment options which can offer fund growth, tax sheltering, and principal protection, but realize that any investment also involves risk. Be honest with yourself, your partner, and your wealth management professional about your risk tolerance, as well as your goals.
  • Try to minimize your fees and expenses by avoiding costly insurance products such as annuities and other financial products that layer management fees in addition to the fees for the investments held inside the accounts.
  • Every journey begins with a starting point. Preview this five-minute video about obstacles in the road so, you can plan better your own personal financial roadmap:


Mark S. Gardner spent 23 years at Bear Stearns, overseeing the local Wealth Management department. Gardner has managed over $175 million for high net worth individuals and families in Dallas and at his boutique, family-run firm, RetireWellDallas, the mission is helping people retire happy! Offering the same blue-chip services of Wall Street giants, but with personalized attention and a focus on retirement income strategies, RetireWellDallas helps clients design tax advantage strategies and retirement income plans that optimize their Social Security benefits and investments, as well as plan long-term care, college funding for children and grandchildren, and much more. For a complimentary assessment of your financial plan, contact Mark via email at or call 214-762-2327.