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A recent study from Financial Finesse, a California-based financial wellness company, reports that women fall short of the money they need for retirement. For the study, “Using an example of a median 45-year-old man and woman, the Think Tank looked at median incomes, deferral rates, retirement savings, life expectancies, and projected healthcare costs to determine how much each would need to save in order to replace 70 percent of their income in retirement.”
The firm discovered a 26 percent gender gap in retirement deficit for median 45-year-old employees, meaning that for every $100 a man saves for retirement, a woman must save $126. This disparity increases to 95 percent when modified to projected retirement expenditures. Specifically, a median 45-year-old man falls $212,000 short of meeting his average retirement expenses at age 65, while a median 45-year-old woman comes up $268,000 short.
Some Factors Contributing to Gender Gap:
- Women live longer: The average life expectancy for a woman turning 65 today is 86.6 years, for a man turning 65 today it’s 84.3 years.
- Women tend to have higher lifetime healthcare expenses than men.
- Among full-time workers, women earn about 78 cents for every dollar a man earns.
A lack of confidence has also been identified as a significant contributor to the gender gap. The report found that women display less confidence than men in the following areas:
- General investment knowledge
- Asset allocation
- Having an emergency fund
- Paying credit cards off in full
The study recognizes the elimination of this “Confidence Gap” as essential to increasing parity between genders when it comes to retirement.
Financial Finesse encourages saving for retirement early and identifying your individual needs. Even though 65 is still decades away, it is important to prepare now in order to be able to enjoy the future.