Women’s History Month presents an opportunity to honor and recognize the invaluable contributions of women throughout our nation’s history. However, it also serves as a time to reflect on areas where advancements in gender equality are still needed. Today, we delve into a critical aspect of women’s financial well-being: ensuring a secure retirement through pensions.

Enduring Challenges

Women in the workplace face distinct challenges in securing their retirement. Research from the National Institute on Retirement Security (NIRS) reveals that retired women receive only 80% of the retirement income earned by men, a direct continuation of gender wage disparity during the working years. 

Even when women are employed full-time, they typically earn less than their male counterparts over their careers. Pew Research shows that the gender pay gap has barely budged since 2002. Today, women typically earn 82 cents for every dollar paid to a man, and that figure has only ticked up by 2 cents in two decades. 

Women encounter a multitude challenges that jeopardize their financial stability in retirement. The prevalence of part-time employment among women, often due to caregiving responsibilities or other societal factors, significantly diminishes their access to employer-sponsored retirement plans. Without these plans, many women must rely solely on personal savings, which may be insufficient to sustain them through their later years.

Furthermore, women tend to live longer, leading to higher healthcare and housing costs later in life. This longevity increases the risk of depleting savings, underscoring the need for robust retirement plans.

Gender Roles Impact Income

At the beginning of their careers, women earn wages closer to the rate of men but fall behind as time progresses. This is true for college-educated women and women who have not earned college degrees, indicating that societal factors and gender norms primarily cause this long-standing pattern.

According to the 2023 Women in Work Index report by PricewaterhouseCoopers (PwC), motherhood is the number one driver behind persistent income disparities. The “motherhood penalty” results in a 60% drop in wages compared to fathers in the decade following the birth of a first child. The chasm between incomes continues to grow as women age, accelerating when women are between the ages of 35 and 44. The 2022 study determined that between the ages of 25 and 34, women made 92% as much as men in the same age category. By age 54, that number drops to 83% and then down to 79% by age 64.The loss in lifetime earnings leads to retirement savings deficits at the end of their careers. 

Public Service Path to Equitable Retirement

Given the discrepancy in lifetime income, safeguarding pensions, particularly for women in the public workforce, is paramount. Policymakers must prioritize measures to protect and strengthen pension programs, ensuring a dignified retirement for all women.

The persistent gender wage gap exacerbates the retirement savings disparity–especially when pensions are taken out of the mix. A report released by Bank of America last year determined that, on average, men’s 401(k) balances are 50% higher than women’s. Beyond the apparent effect of lifetime wage disparity, men also average higher contribution rates than women, 6.6% versus 6.2%. Considering that most Americans’ 401(k) retirement accounts are nowhere near enough to retire with, women are particularly vulnerable to this phenomenon. 

Defined benefit pension plans guarantee more security for women in the public sector. Historically, female-dominated industries, such as public education, continue to offer lifetime retirement income in return for a career dedicated to the community. Contractually-determined contribution rates, risk pooling, and appropriate vesting periods all help stabilize future income. NIRS research also highlights the importance of pensions in supporting middle-class women. Their study on women’s retirement preparedness examined different income groups and found that those earning between $40,000 and $79,999 annually received a larger proportion of their retirement income from pensions compared to lower and higher-income groups.

Protecting Pensions for the Future

The role of caregiver carries the burden of interrupted career advancement and lower retirement savings. As primary caregivers, lost income and opportunities for retirement contributions can have lasting effects on women’s financial security in retirement. While stereotypical gender roles remain prevalent, the importance of protecting and strengthening pension programs cannot be overlooked. By addressing the systemic barriers and inequalities that hinder marginalized individuals’ financial well-being, we can strive toward a future where every American enjoys a dignified and secure retirement.