For years, an income gender gap has existed between males and females. Despite enormous efforts and great successes, the income gap is causing retirement planning for women to be a hardship.
Here are facts that are a source of concern.
• Approximately 2 out of 5 working women earn less than $30,000 per year.
• Almost 3 out of 5 working women earn less than $ 40,000 annually.
• Of the 62 million wage and salaried women (age 21-64) working in the U.S., just 45% participated in a retirement plan
• Regarding earned income, men tend to have higher average account balances. The gap gets wider with age – women who are 70+ years have less than half the balance of men the same age.
• Women’s earnings average $.79 for every $1 earned by men – a lifetime loss of over $300,000.
The gender gap difference should not be surprising, and yet when it comes to overall wealth, women are gaining much faster than men. One estimate is by 2035; women will control 2/3rd of all wealth.
The answer is simple; women live longer than men. Eventually, wealth will end up in the hands of women, strictly based on life expectancy.
Living longer can also be a curse for those without sufficient income (or wealth). The great fear of living too long can mean outliving your money which could be a personal disaster.
Not only long-term income becomes a must, but consideration for long term care planning becomes an essential. Living a long life can mean an eventual deterioration of personal health, a deterioration that could mean care in a retirement facility.
Faced with a lower income earning potential, difficulty in accumulating retirement funds, living a longer period of employment years and then consideration of a long-term health crisis can make most people weak kneed. How do women account for the financial future facing them?
While no one answer can solve all of these issues, indeed using an annuity with a lifetime income option will help remove the fear of living too long. If the female employee has access to a pension, adding those guaranteed dollars to a social security base will help. Layering income that is guaranteed from an annuity also provides a bedrock of revenue that will pay a lifetime.