The typical boomer household is heading into retirement while owing $28,672.
- Boomers don’t have enough saved for retirement, per new Census data.
- Women are worse off with fewer savings than men, more of whom have six figures saved.
- The wage gap has made it so that women have less money than men to put toward savings.
The golden years aren’t shining all that bright for some boomers, many of whom don’t have enough money saved for retirement.
It’s an even bigger problem for women, who don’t have the savings that men do, according to a report that the US Census Bureau released last week. About 50% of women ages 55 to 66 have no personal retirement savings, compared to 47% of men, the researchers found.
The report also said that marriage has a big impact on how much one can save. In their assessment, the researchers found that about 35% of people who were married at least once have no retirement savings, compared to 60% of people who were never married. Both men and women who have been married experience long-term savings benefits.
The report shows that roughly half of all retirement-age Americans have no savings. Women have less: The savings gap is negligible between men and women with $10,000 saved, and much bigger between men and women who have $100,000 saved, with men doing better as the amount of savings increases. Coupled with the generation’s debt load and a dwindling Social Security program, boomers’ puny funds may signal a retirement that’s not all it’s cracked up to be. For women, it’s partly a result of the long-term effects of the wage gap — throughout their careers, they’ve earned less to sock away.
Boomer finances aren’t looking rosy
Dismal retirement savings are an even bigger issue in the context of boomers’ debt load. The typical boomer household is heading into retirement owing $28,672.
Considering that the actual savings balance of most retirees is lower than it should be, they won’t have much to dip into to pay off that debt. The median 55- to 64-year-old’s 401(k) account balance is $61,738, according to Vanguard data. For those 65 and up, it’s $58,035. That’s not to mention the sizable chunk of boomers that the Census found have no retirement savings at all.
It’s leaving boomers woefully unprepared to afford healthcare, which also happens to cost more for women. Most recent data available from Fidelity estimates that the average 65-year-old woman retiring in 2019 will spend $150,000 on healthcare alone in retirement, and the average man will spend $135,000. Both scenarios are more than double the median retirement balances.
It seems they won’t have Social Security to rely on either. The program is set to run out of funds for full payments a year earlier than anticipated, in 2034, according to a 2021 report from the US Treasury Department that blamed the pandemic and related recession for the shift.
Retirement savings reflect the wage gap
The disparity in salaries between men and women might explain the disparity between their savings later in life. On average, women made 84% of what men did in 2020, according to the Pew Research Center. Women between 25 and 34 years of age earned 93 cents to every dollar made by men in the same age group.
Those disparities are worse for people of color, women of color in particular getting paid less than their male peers.
Black men, for instance, are paid just $0.71 for every dollar paid to white men, the Economic Policy Institute reported in 2020.
Black women especially suffer— according to the National Women’s Law Center, it takes the typical Black woman 19 months to make a white man’s annual earnings in the US. The EPI found that Black women are paid $0.63 for every dollar paid to white men. That pay gap adds up over time: the NWLC estimates that a Black woman can lose $964,400 over a 40-year career. That’s $964,400 she hasn’t spent, invested, or saved.
Closing the wage gap could be the key to closing the retirement savings gap in the future.