This counterintuitive finding is due largely to three factors, according to the CRR:
- The progressive design of Social Security benefits
- Inadequate saving in workplace retirement plans
- Adverse impacts from divorce
Women of every marital status face significant challenges in achieving financial security in retirement. As Prudential’s previous report, Closing the Retirement Income Gender Gap, notes, women on average earn about 20% less than men, receive less in Social Security benefits, and save 32% less in retirement savings. Women also are more likely to have inconsistent work histories due to caregiving responsibilities, which can make it harder for them to save for retirement.
So why is it that two incomes don’t necessarily translate into long-term financial security?
- They get used to living a two-income lifestyle.
- They pay more in Social Security taxes and receive lower Social Security benefits per tax dollar paid.
- And they save too little in workplace retirement plans.
It’s always been important for women to plan and save for retirement, but it’s even more true today, especially for women in two-income households. Fortunately, there are many steps women can take to put them further along the road to retirement security.