There has been heightened discussion recently about women’s inequality in many areas of society—including financial security. Gail Buckner, CFP, our personal retirement and financial planning strategist, explores the gender pay gap and how it has contributed to a poorer post-working life for many older women. She also explores a 2018 Franklin Templeton survey which revealed even younger women are generally feeling insecure about their financial futures.

The Gender Pay Gap

While there have been many strides in terms of gender equality, there clearly is more work to be done. A major study by the National Institute on Retirement Security (NIRS) found that women were 80% more likely than men to live in poverty.1 On average, the NIRS study showed women age 65 and older have been living on 25% less income than men of the same age, and for those age 80 and older, this widens to 44%.2 This report cites several factors; for one, women have “higher rates of part-time employment” and shorter job tenures. As a result, many do not qualify for employer-sponsored retirement benefits—if there are any. The NIRS said that in 2010, men received $17,856 in median retirement income from a pension, whereas women received $12,000—33% less.3

Social Security benefits are lower for women, too. Why? For one thing, on average, women earn less than men.

According to a study by the American Association of University Women (AAUW), women working full time in the United States (as of 2015) typically were paid just 80% of what men were paid.4 In addition, the AAUW found women experience pay gaps at “every education level and in nearly every line of work.”5 Although the types of occupations women tend to gravitate toward can partly explain the earnings difference, AAUW found that choices such as college major, occupation, work hours and time out of the workforce couldn’t completely explain away the gender pay gap. Additionally, discrimination and bias against women in the workplace were also cited as culprits.6

Baby, Oh Baby

Even though fathers are becoming more active in child-rearing than they were decades ago, in traditional families, mothers are still more likely to drop out of the workforce and/or take an extended leave to care for their children. The reasons are often emotional as well as financial. Child care—especially for young babies—is incredibly expensive. According to the Economic Policy Institute (EPI), in 33 states and the District of Columbia, infant care costs exceed the average cost of in-state college tuition at public four-year institutions.7

Many couples seem to conclude that if most—or all—of mom’s salary is going to be spent on a childcare provider, why not just have mom leave the workforce to care for the child?