3 Ways the Gender Pay Gap Affects Women in Retirement

There has historically been a pay gap between men and women for comparable jobs which favors men. This phenomenon generally affects retirement funds as well – this is called the gender retirement gap.^[1] On average, women earn 17% less than men, taking home $89 compared to the man’s $100.^[2] The gender pay gap has lasted throughout history, affecting global economic potential, and has cost the US an annual $1.6 trillion^[3] in potential economic activity. This pay gap has hindered women’s ability to achieve retirement.

1. Less Social Security Benefits

Of all outcomes, this is the most important to note. Social Security serves as the main source of income for 52% of elders, especially for women of color.^[4] Having earned less than men throughout their work careers, women contribute less to Social Security and earn less from this source upon retirement. On average, women’s Social Security benefits are 20% less than men’s, mostly because of historically lower earnings and other factors like career breaks and time off for caregiving.^[5]

2. Lower Retirement Income

Women also earn lower retirement income, especially from employer-related funds like pensions or defined contributions like 401(k)s. This is due to factors like undervalued female labor, racial and gender bias, and the perceived risks of hiring working mothers. Working mothers are paid 69% of what full-time working fathers are paid^[6] and are more likely to work part-time due to caregiving responsibilities, receiving less to tuck away into a 401(k) or for pension benefits. This contributes to women earning 80% of what men earn as retirement income.^[7]

3. Lower Savings

Because women earn less, they also have less in savings for retirement. While women have been reported to be more disciplined savers, they still have 30% less savings than men by the time they retire.^[8] Additionally, women tend to tap into their retirement savings and Social Security funds earlier due to caregiving duties, whether for children or aging parents.^[9] Women earning and saving less eventually affects how they live in retirement. Women also have a higher life expectancy, living longer on average with less to sustain themselves. In addition, women make up the majority of the impoverished elderly.