Income Inequality and Its Impact on Women's Retirement

Here are the facts. Generally speaking, women earn less than men, live longer than men, and often take time out of the workforce to have children and/or to care for an aging parent or sick loved one. The potential consequence of these realities? While most U.S. workers are facing a retirement savings deficit, for women, the effect is compounded: Lower pay translates into reduced Social Security benefits, smaller pensions, and less retirement savings.

You needn't look far to find evidence of the gender retirement gap. Consider the following facts:

Many women will need to make their retirement nest eggs last longer than men's. According to the latest data from the Social Security Administration life expectancy in 2024 for females is 85.5 years old compared to 82.9 for males.¹

The gender wage gap has a ripple effect over a woman's entire career. The National Women's Law Center has found that a woman starting her career now will lose more than $462,000 over a 40-year career; for Latinas, Blacks and Women of Color this gap can exceed $1 million.  Put another way, a woman would have to work over 50 years to earn what a man earns in 40 years.²

Family caregiving causes career interruptions that can have significant monetary consequences over time. Research conducted by the AARP revealed that family caregivers face significant financial setbacks ranging from covering out of pocket expenses, home modifications, medical equipment, lost wages, and reduced savings.³

 The retirement income gap is very real. Driven by factors such as the gender wage gap and taking time off of work for family caregiving, the average Social Security benefit for women older than 65 was $23,339 annually in 2024, compared with $27,909 for men, according to Social Security Administration data.⁴ 

While the evidence is compelling and points out the continuing challenge women face in attaining a secure financial future, there are also signs of improvement for women and their outlook for retirement. For instance, according to Bureau of Labor Statistics recent study, women are working for more years now than ever before, which helps to enhance their Social Security benefits, pension income, and retirement savings. Specifically, the study found that the workforce participation of women age 55 to 64 has climbed from 56.6% in 2003 to 60.2% in 2023.⁵ Also, today approximately 43.5% of women participate in workplace retirement plans.⁶

More broad-based measures, such as legislative action to eliminate the gender pay gap would go far toward leveling the playing field for women when it comes to retirement readiness, yet such policy matters are complicated and outcomes are impossible to predict.

Despite these challenges, many women retire with enough money to relax and enjoy their later years. Here's how they do it:

• Saving as much as they can: In 2025 you can save up to $23,500 in an employer-sponsored retirement plan, plus a $7,500 "catch-up" contribution if you are age 50 or older. Your contributions are made on pretax income, which means you're paying taxes on a lower amount.⁷
• Becoming educated about other sources of retirement income. No matter how committed you are to saving, chances are your employer-sponsored plan won't provide all of the money you'll need once you retire. Find out as much as you can about Social Security -- and strategies for claiming your benefits -- as well as IRAs and other investments that can help fill in the gaps.
• Make the connection between life expectancy and income needs. Even if you already have a healthy nest egg, it's important to continue saving because you could end up spending 20 or 30 years in retirement, which means you'll have to save that much more.

Regardless of your personal challenges, you can take charge of your financial future -- starting today.

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¹ https://www.ssa.gov/oact/TR/2024/lr5a4.html

 ² https://nwlc.org/resource/the-lifetime-wage-gap-state-by-state/#:~:text=Based%20on%20today's%20gender%20wage,%241%20million%20over%20a%20lifetime.

³ https://www.aarp.org/caregiving/financial-legal/info-2025/financial-impact-caregiving.html#:~:text=%E2%80%8BAccording%20to%20AARP%20research,Many%20spend%20much%20more.

⁴ https://www.kiplinger.com/retirement/social-security/what-is-the-average-social-security-check-by-age

⁵ https://www.bls.gov/emp/tables/civilian-labor-force-participation-rate.htm

⁶ https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/publications/women-and-retirement-savings

⁷ https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000