The pandemic has widened the gap between women and men's retirement savings. What to know about catching up
The two years since the coronavirus pandemic led to sweeping lockdowns across the U.S. have hit women in the workforce especially hard.
Now, the gap between their retirement savings as those of their male counterparts has widened further.
Only 19% of women are confident they're on track to retire without running out of money, according to a survey from TIAA that questioned more than 3,000 adults. That's compared to 35% of men, the survey found.
In 2013, the gap between men's and women's perception of their retirement readiness was 9 percentage points. The 2022 study showed the gap had grown to 16 percentage points.
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In addition, only 31% of women surveyed said they were able to save for retirement.
"That hit my gut, that only 1 in 3 women have the ability to put money aside for retirement," said Shelly-Ann Eweka, senior director of financial planning strategy at TIAA. That's compared to 44% of men.
Covid has hit women harder
The gap between what men and women have saved for retirement has long been documented, and generally gets wider with age, according to the U.S. Census Bureau.
In 2016, the median household income for women 65 and older was $47,244, including earnings and income from retirement, property and Social Security, according to a May 2020 paper from the National Institute on Retirement Security. For men 65 and older, the figure was $57,144.
Going into 2022, women overall still earn about 83 cents to every dollar a man makes, a gap that is even bigger for women of color.
That impacts women's ability to pay their bills and save for retirement. About 29% of women surveyed by TIAA are currently struggling to pay monthly bills, the study found.
The pandemic has also kept many women out of the workforce, which often means they're not actively saving for retirement. Since 2020, about 2 million women have left the workforce, according to the U.S. Bureau of Labor Statistics. When women stop working, those lost earnings can result in their retirement savings generating 30% less income over time, according to the Organization for Economic Co-operation and Development.
"Those are earnings that will probably never be recovered," said Eweka.
How to rebuild
To be sure, it's OK to pause or save less for retirement because you've lost your job or some of your income, or had any other change in circumstance. It is possible to rebuild your retirement savings.
"In the short term, it is OK if you have to adjust," said Marguerita Cheng, a certified financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.
One way is to continue to make any contributions you can to your 401(k), or an individual retirement account if you've lost your job and access to employer-sponsored plans, said Kelly DiGonzini, CFP, director of financial planning at Beacon Pointe, an independent advisory firm in Newport Beach, California.
Any amount you're able to invest will grow over time.
If you are working and have an employer-sponsored plan, make sure you take advantage of any matching offered, said Eweka. Many employers also offer financial planning benefits, which can help you see if you're on track to retire when you want, she said.
If you can't save consistently, allocating part of windfalls such as a tax refund is a good way to contribute to retirement, said Cheng, who is a member of the CNBC Advisor Council.
Women should also focus on spending and living within their means, said Shweta Lawande, a CFP and analyst at Francis Financial, a New York-based firm dedicated to serving women, couples and those experiencing divorce.
"What we're trying to share with our clients in this time is to focus on what they can control," Lawande said. While they can't control lockdowns or the job market, they can make sure their budgets are airtight, she added.
Those with an existing portfolio can take some time to check their asset allocations to ensure they're invested in a diverse group of stocks, bonds, real estate, cash and more, said Lawande, adding that it reduces risk.
Working with a financial advisor, if possible, can also help women make sure they're on track to retire when they'd like to and to formulate a strategy to course correct if they're not.
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