New research outlines a range of factors that help explain why women face such an uphill climb in funding their retirement.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The report from the National Institute on Retirement Security found that median household income for women aged 65 and older was just 83% of median household income for men in 2016.” data-reactid=”17″>The report from the National Institute on Retirement Security found that median household income for women aged 65 and older was just 83% of median household income for men in 2016.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Christian Weller, a professor at the University of Massachusetts, Boston, and one of the authors of the study, says the numbers, while stark, don’t fully reflect the disparities.” data-reactid=”18″>Christian Weller, a professor at the University of Massachusetts, Boston, and one of the authors of the study, says the numbers, while stark, don’t fully reflect the disparities.

“The edges are large,” Weller told Yahoo Finance. The report, written with colleagues Joelle Saad-Lessler and Tyler Bond, lays out a “gender pay gap that eventually becomes a retirement wealth gap.” 

The disparity is not because of differences in retirement participation rates when working. The gap stems most notably from women’s lower earnings throughout their working lives.

The report found that median household income for women 65 and older in 2016 was $47,244, compared to men who received $57,144 a year in retirement. 

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Weller appeared as part of Yahoo Finance’s ongoing partnership with the Funding our Future campaign, a group of organizations advocating for increased retirement security for Americans.” data-reactid=”22″>Weller appeared as part of Yahoo Finance’s ongoing partnership with the Funding our Future campaign, a group of organizations advocating for increased retirement security for Americans.

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The ‘strong effect’ of caregiving” data-reactid=”23″>The ‘strong effect’ of caregiving

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="One finding from the report – which analyzed data from the Census Bureau’s Survey of Income and Program Participation from before the coronavirus pandemic – was a strong negative economic effect from the fact that women typically take on the lion’s share of caregiving responsibilities.” data-reactid=”24″>One finding from the report – which analyzed data from the Census Bureau’s Survey of Income and Program Participation from before the coronavirus pandemic – was a strong negative economic effect from the fact that women typically take on the lion’s share of caregiving responsibilities.

This is particularly true during prime income-earning years, when children require caregiving: “Generally the wife will be more likely to leave the labor force, cut back on hours thereby forgo some earnings,” says Weller.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="But the effect is present throughout life. Women, as an example in the research, are more likely to care for a sick spouse, and it impacts their ability to prepare for retirement, more so than when the roles are reversed. Indeed, a 2018 report by Merrill Lynch found that “when a woman reaches retirement age, she may have earned a cumulative $1,055,000 less than a man who has stayed continuously in the workforce.”” data-reactid=”26″>But the effect is present throughout life. Women, as an example in the research, are more likely to care for a sick spouse, and it impacts their ability to prepare for retirement, more so than when the roles are reversed. Indeed, a 2018 report by Merrill Lynch found that “when a woman reaches retirement age, she may have earned a cumulative $1,055,000 less than a man who has stayed continuously in the workforce.”

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Other factors, like divorce and health” data-reactid=”27″>Other factors, like divorce and health

“Divorce is essentially a heavy penalty on women’s economic security,” says Weller, pointing to how “it becomes much harder for the divorced woman to regain their earnings.”

The report found that divorced women between the ages of 18 and 64 had an average of $38,613 saved for retirement, while married women had an average savings of $50,126.

The timing of divorce also matters as, the report notes, if it happens early in a woman’s life, she may have time to build her own retirement savings.

Another factor is health. While women tend to live longer they also “often struggle with more health issues in their 60s and thereby have to leave the labor market sooner than men,” says Weller.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="And because women live longer, they need to stretch already limited savings to cover those years. It often doesn’t work: “Women experience a steep decline in income past age 80,” the report says, adding that they “are much more likely to be widows and widowhood presents challenges on both the income and cost side of retirement.”” data-reactid=”32″>And because women live longer, they need to stretch already limited savings to cover those years. It often doesn’t work: “Women experience a steep decline in income past age 80,” the report says, adding that they “are much more likely to be widows and widowhood presents challenges on both the income and cost side of retirement.”

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="A hit from coronavirus, especially for women of color” data-reactid=”33″>A hit from coronavirus, especially for women of color

Weller has also been looking at how the coronavirus pandemic is affecting women and the gender wealth gap.

“Job losses have been even greater among women of color than among men,” he says. “That’s true for African-American, Latina women as well as Asian-American.”

The disparities can often be attributed to the industries women work in. But “it doesn’t really matter how exactly you cut the data, this falls most squarely on women of color,” Weller says. One group especially hard hit was older Asian women.

“The pandemic is making a really bad situation already much worse,” says Weller.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Ben Werschkul is a producer for Yahoo Finance in Washington, DC.” data-reactid=”40″>Ben Werschkul is a producer for Yahoo Finance in Washington, DC.

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