The Challenges Women Face on the Road to Financial Security

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The Challenges Women Face on the Road to Financial Security

Nancy LeaMond is AARP’s chief advocacy and engagement officer.

Across the country, women of all ages are falling behind their male peers on the road to a secure retirement. 

• From the start of the pandemic through December 2021, women accounted for nearly 60 percent of our country’s 3.6 million net job losses.
• Approximately 1.1 million women left the workforce entirely.
• 1.8 million more women were underemployed, or working fewer hours than they’d like.
• Meanwhile, as of December 2021, more than a third of unemployed women had been out of work for at least six months.

Taken together, these challenges have serious economic implications for older women today and generations of younger women in years to come.

But women’s long-term financial insecurity isn’t a new problem. The pandemic is simply accelerating a crisis that has been decades in the making.  

To better understand what is happening, let’s look at the obstacles women face at different points in their life:

The first happens as soon as she enters the workforce.  

When a young woman gets her first job, she often earns less than her male counterparts. This gender pay gap persists and compounds over time. Overall, women earn an average of 82 cents for every dollar earned by men, and the gap is even larger for Black and Latina women (62 cents and 54 cents, respectively). Smaller paychecks make it harder to cover day-to-day expenses – meaning less is left over to start saving for the future.  

Fast forward a few years and it’s time to start a family.

In part because child care is so expensive, many women “lean out” – cutting back on their work hours, forgoing promotions or other opportunities, or leaving the workforce entirely. Financially, this decision has ripple effects. Reduced earnings again lead to lower savings. And down the road, it will mean lower Social Security benefits since those are based on lifetime income. If or when she decides to return to full-time in her current job or re-enter the workforce, she is now years behind her male colleagues in terms of position, earnings and savings.  

Because of this, many women are still playing catch up when they become caregivers again – this time for aging parents and other adult loved ones. 

On average, “second wave” family caregivers spend 24 hours a week – the equivalent of an unpaid part-time job – doing everything from driving to doctors’ appointments and managing medications to preparing meals and handling financial and legal issues. In other words, just when she is reaching what should be her career peak salary-wise, she is again forced to scale back or leave the workforce.

A woman in this situation could lose $120,000 in lifetime earnings if she reduces her work hours and $142,000 if she stops working altogether. On top of this, women caring for adult loved ones are spending on average 27 percent of their annual income on care-related expenses.    

After everything, if she tries to re-enter the workforce when she’s in her 50s or 60s, she may be dealing with the triple whammy of age, gender, and – for women of color – racial discrimination.   

A recent survey indicated that 76 percent of women report having experienced or observed age discrimination in the workplace, and gender biases only compound these difficulties. Many older women end up under-employed, working and earning less than they’d like, doing gig work without benefits or never going back to work at all.

Taken together, when women reach retirement, all of this translates into lower incomes, less in personal savings and lower Social Security benefits.

However, women live longer than men on average and have higher health care costs in retirement. And nearly half of women over 50 are single, so they shoulder the economic burden alone. The bottom line? These numbers simply don’t add up. Women at every age are more likely than men to live in poverty, and the gap widens over age 75.  

So, what can we do?

Women have made great strides towards improving their financial situations, but they need help, and they need it now. To make this road less daunting, we need to:

• First, reduce gender pay inequity and create paid leave and other caregiver-friendly workplace policies so that women can balance work with their responsibilities at home.

• And we need to bolster Social Security, the bedrock of retirement funding, for millions of women 65 and older.

These are good first steps to put women and their families on firmer financial footing.