Why Mothers Have Low Retirement Savings


Moms are really ill-prepared and heading into retirement. Gorodenkov/Getty Images

Mothers make many sacrifices for their children, and many are willing to do so. However, they may not realize that these trade-offs can threaten their ability to feed themselves later in life.

Half of US mothers report having no retirement savings, according to a new analysis by The Century Foundation using data from the Financial Health Network. By comparison, only about 32% of fathers said they had no savings, and she was 39% of childless Americans.

Half of Mothers Have No Retirement Savings See Chart

The report’s author, Laura Valle Gutierrez, points out that mothers are disproportionately responsible for social care tasks. , “she says. ‘It’s her mother who’s paying the price for the status quo.'”

Women generally face more threats to their long-term financial security than men, but these challenges are exacerbated for women with children, the report said. Not only do mothers face a gender pay gap (a woman will earn her $0.83 for every dollar that a man will earn in 2023), but ” I also face the penalty of being a mother. “Mothers also get paid less with each child, which impacts the disposable income they have to save,” Valle Gutierrez told Fortune magazine.

That penalty may be due, at least in part, to women having more childcare responsibilities than men. and her husband reported a tendency to spend more time on leisure activities. A study by the National Women’s Law Center (NWLC) found that unequal caregiving work costs women an average of $400,000 in lifetime earnings over the course of a 40-year career. A black woman generally experiences her $1 million loss in lifetime earnings.

Children aren’t the only things women look after. About 61% of Americans who regularly help their aging parents or those with special needs are women. Most caregivers also report that they have lost their jobs because of their responsibilities.

In the United States, retirement savings are tied to work, from employer-sponsored accounts such as 401(k)s to the Social Security Administration’s work history calculator. Women’s social security benefits average about $5,000 less than men’s ($20,050 per year compared to $15,379 for women). Social Security payments are calculated based on the worker’s highest 35 years of earnings, at which age retirement benefits begin.

As such, many women remain financially vulnerable in their later years. Another 2021 report by the NWLC and Center on Poverty and Social Policy found that about 16% of women over the age of 65 live in poverty, compared to just 12% of men their age. is. Women also tend to live longer than men, and medical costs tend to rise as they age. That makes a healthy retirement nest egg all the more important.

In an earlier era when men were more likely to be the main breadwinners of their families, women were often economically disadvantaged because pensions and retirement savings were expected to be provided not only for themselves but also for their partners. A higher percentage of women now receive benefits based on their income. For many, including single women, this has led to financial freedom in retirement, but mothers still face shortfalls compared to fathers and non-parents.

Valle Gutierrez says the COVID-19 pandemic has highlighted the disparities among mothers. 865,000 women left the workforce when schools and daycares closed across the country. But even among mothers who successfully juggled work and childcare responsibilities, there have been consequences, typically in terms of job mobility. Many mothers have reduced their working hours or switched to other, more flexible jobs.

“All these choices that women and mothers make to manage their own care responsibilities will ultimately have a very large impact on their wages, reducing their chances of promotion and lowering their overall lifetime earnings.” says Valle Gutierrez.

According to Valle Gutierrez, the results were bleak.

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