Retirement Savings Crisis: Women Face Widening Gap

The Schroders 2024 US Retirement Survey reveals a growing retirement-savings gap, with Americans needing $1.46 million for a comfortable retirement but averaging only $88,400 in savings. Women are disproportionately affected, saving 24-30% less than men due to pay gaps, part-time work, and longer lifespans.

Aqsa Younas Rana
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Retirement Savings Crisis: Women Face Widening Gap

Retirement Savings Crisis: Women Face Widening Gap

American workers, particularly women, are grappling with a growingretirement-savings gap, according to the Schroders 2024 US Retirement Survey. The survey reveals that the average American needs to save a staggering $1.46 million for a comfortable retirement, yet the average savings amount to a mere $88,400.

Why this matters: The retirement savings crisis has significant implications for the financial security and well-being of millions of Americans, particularly women, who are already disadvantaged by discriminatory pay gaps and longer lifespans. If left unaddressed, this crisis could lead to increased poverty rates and a greater burden on social security systems in the future.

Theretirement-savings crisisis even more pronounced among women, who save 24-30% less than men due to discriminatory pay gaps, part-time work, and longer lifespans. Only 44% of retired Americans believe they have saved enough for retirement, while 32% are convinced they have not accumulated sufficient savings.

The survey, conducted from March 15 to April 5 among 2,000 U.S. investors ages 28 to 79, including 498 retired Americans, highlights the financial stress and concerns faced by retirees. One-third of retirees worry that financial stress will affect their overall health, and 26% reported losing sleep over their financial situation.

Retirees are also grappling with higher-than-expected expenses and healthcare costs. The survey found that 47% of retirees reported their expenses in retirement are higher than anticipated, and 49% believed Medicare would cover more of their health care expenses. On average, retirees spend 14% of their total monthly income on health care costs, including insurance premiums, out-of-pocket expenses, and prescription costs.

Uncertainty about the longevity of retirement savings is another pressing concern. The survey revealed that 58% of retired respondents have no idea how long their savings will last, and 63% wished they had done more planning before retiring.

Deb Boyden, head of U.S. defined contribution at Schroders, emphasized the urgency of the retirement savings crisis, stating,"The challenges facing retirees today are further evidence of the retirement savings crisis. For younger generations with longer time horizons, now is the time to prioritize saving for a brighter future. "Boyden also highlightedthe shifting landscape of retirement planning, noting that"The corporate pension plans that are being relied upon by today's retirees may not be there for all retirees in future generations. This shift in how Americans will be meeting their expenses in retirement moving forward underscores the urgency for bolder actions from retirement savers, plan sponsors and asset managers."

Theretirement-savings gapin America, especially among women, underscores the critical need for increased awareness, proactive planning, and systemic changes to address the disparities and challenges faced by workers as they prepare for their golden years. As Boyden aptly stated, bold actions from all stakeholders are necessary to ensure a more secure and comfortable retirement for future generations.