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Women and Retirement

Working women may face several situations that make saving for retirement more difficult, including having shorter working careers and living longer than their male counterparts.

According to the U.S. Department of Labor, women are more likely to work in part-time jobs that do not provide a retirement plan. Working women are also more likely than men to interrupt their careers to take care of family members. Therefore, they work fewer years and contribute less toward their retirement savings, resulting in lower lifetime savings.

Women as Family Caretakers

Historically, women have shouldered more of the responsibility of caring for sick and elderly family members, as well as young children. These traditional roles continue today and consequently, the average woman spends 27 years in the workforce versus 40 years for the typical man. That translates into a significant difference in income replacement for women at retirement.

For example, in OPERS, one year of service credit is equal to a two percent replacement of your income when you retire. Using the averages stated above, a woman who spent her entire career in a position covered by OPERS would replace 54 percent of her pre-retirement income versus 80 percent for her male counterpart. This leaves a significant income gap for women to meet the 70-90 percent income replacement experts recommend for retirement. This problem is compounded by the longer life expectancy of women.

Financial Impact of Living Longer

On average, a female retiring at age 65 can expect to live another 21 years – a full two years longer than a man retiring at the same age. Two sources on aging report almost half of women 65 and older are widows, and 80% of women die single compared to 80% of men who die married.

While these statistics may seem discouraging on the surface, they are meant to serve as a reality check and a warning to plan accordingly. The death of a spouse often means a drop in income from a spouse’s pension and even Social Security. Also at advanced ages, medical costs will require a disproportionate amount of our savings.

Women certainly face unique financial challenges when planning for retirement, but with knowledge and planning we can gain greater peace of mind for a more secure retirement.


This article was first published in the Winter 2012 edition of the Retiring Right newsletter. Click here to view other newsletters. Not receiving your newsletter, update your address by completing the Change of Address form.


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