The largest cohort of baby boomers is set to reach age 65 by 2030, with women making up 52% of this group. However, new research from the Alliance for Lifetime Income reveals that women are more likely to struggle in retirement compared to men. As income from employer pensions has decreased, individuals entering retirement age are increasingly reliant on personal savings and Social Security. Not only women, but also people who are Black, Hispanic, or without college degrees are at higher risk for financial insecurity in retirement. On the other hand, men, white individuals, and those with college degrees are better positioned financially for retirement, with multiple retirement accounts and higher balances.
The median retirement savings for peak boomers is $225,000, but there is a significant disparity between men and women. While men have a median savings of $269,000, women only have $185,000 saved. This shortfall for women is evident across different types of retirement assets, including defined contribution plans, individual retirement accounts, investments, savings accounts, and home equity. Additionally, there is a 33% disparity in the median Social Security benefits between retired peak boomer men and women. Men receive an average initial annuity payout of $15,700, compared to $13,700 for women. By 2030, more women are expected to qualify for federal benefits like Supplemental Security Income compared to men.
To help women improve their retirement preparedness, it is essential to address the root causes of financial disparities. Women on average earn 80 cents for every dollar earned by men, and they live six years longer on average, requiring more savings. Lower risk tolerance and the caregiving responsibilities of women also contribute to their financial challenges. Employers can play a role in addressing these root causes, and the financial industry can make expert guidance more accessible and appealing to women. By simplifying solutions and products and encouraging women to seek advice from financial experts, the industry can help women better navigate their retirement planning.
The study emphasizes that women face persistent disparities in earned income and savings compared to men, complicating their ability to achieve financial security in retirement. With women making up the majority of peak baby boomer retirees, it is crucial to address these disparities and provide support and resources to help women improve their retirement outcomes. By acknowledging and addressing the unique challenges that women face in retirement planning, policymakers, employers, and the financial industry can work towards creating a more equitable retirement landscape for all individuals.
