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The Gender Pay Gap in Social Security

We know that there is still a gender pay gap for women, so what does this mean for your Social Security payouts?
By MSA Staff


We know that there is still a gender pay gap for women. Today the difference in earnings is 21 cents on each dollar earned.¹  That seems like a small amount, but the difference can add up.

If you are a woman, what does this mean for your Social Security payouts? In 2021, men received an average payment of $1,723.82 per month, while women received an average of $1,388.08 per month.²  There are lots of other factors that determine your monthly payout, but this gives you an idea of the disparity.

This all carries over to retirement savings, as well. Why do women get less in retirement and Social Security than men?  This does not only have to do with the gender pay gap. Women often drop out of the workforce to raise kids or to care-take for sick or aging family members.  This means that they have less cumulative time in the workforce earning money.  They can’t contribute as much to retirement accounts, because they are working less, and frankly earning less. If they have earned less, they probably have saved less.  This may mean that many women find themselves unprepared to meet the financial challenges of retirement. It’s said that women typically retire with 34% less money in retirement than men.³

Even though it’s been illegal since 1963 to pay women less, there is still a wage gap. The income gap will also translate into lower income from Social Security and pensions, since those benefits are determined by what you earn.

Why do Women Save Less?

The facts are scary. About half of women ages 55 to 66 have no personal retirement savings, compared to 47% of men.  Now add that today the typical Boomer household will retire owing almost $30,000 in debt.⁴

One reason that women save less is that it appears that women are the ones who step-up-to-the-plate to pay those small expenses that come up along the way.  Your child needs new soccer shoes; you got a flat on the way to work and need a new tire; the dog got sick and there is a vet bill; the prom is coming up and your daughter will be crushed without the latest fashion.  Mom is the first one to step in.  These “small” expenses can really add up and keep women from saving enough.

Financial Insecurity

Women live longer than men; that may be the good news.  It’s sad that the life expectancy for women is around 81. But the bad news is that women then have a longer time to make their money last.  The message here is that you can’t count on Social Security to be your only source of income in retirement.

Things to Think About

Though women may get less money from Social Security than men, you do not have to resign yourself to years of lower benefits. Here are some tips to consider…

Hold off to collect: If you can hold-off collecting benefits past your full retirement age, you will get an 8% bump, up until age 70.⁵  You are allowing your Social Security savings to keep earning compounded interest. That increase will be there for the rest of your life.

Work Longer: The other way to boost your benefits is to work longer. Social Security uses your 35 highest-earning years to calculate your Primary Insurance Amount which is the monthly benefit you will receive as of your full retirement age.⁶ So, if you have worked for less than 35 years, Social Security will calculate that as a zero toward your future payouts.  Consequently, if you are able to replace some of the lost time you took off, by working now, you will raise your future monthly payments.  Even if you did work your whole life, if you are earning more toward the end of your career than you did way back when, you’ll replace some lower-income years with higher-income years.

Save More: It can seem daunting to try and save more for retirement, but you will be grateful for it when you retire. You hear lots about the power of investing by just cutting out that daily coffee.  But let’s really look at what that means.  Let’s say you are 30 years old and you drink designer coffee each day.  But instead of doing that, you invested the $200 a month you would have spent on your java, and invested it earning a rate of 6%. (This does not account for inflation or taxes.) At age 60 you would have about $200,000 more to retire on. Do you think you will miss $200,000 of coffee?

Spend Less:  You know that belt-tightening can give you extra savings.  We know that a budget seems like an object of torture.  But it’s not.  Set your budget up as a challenge.  We at MSA are here to help you design a budget to fit your goals. A budget can be fun.  I bet you never saw budget and fun in the same sentence? We will make it a challenge that will fit into your life to achieve your goals.

College Savings:  This is a hard one to wrap your arms around, but remember, your kids can borrow money for their college, you can’t borrow money for your retirement. We know that saving money for your kid’s college is a priority, but it should come second to you saving for your retirement.

Remember, our Coaches at MSA are here to help you build the financial life you want.

About the Author

Neale Godfrey is a New York Times #1 Best Selling Author of 27 books on empowering families (and their kids) to take charge of their financial lives.

¹ “Gender Pay Inequality: Consequences for Women, Families and the Economy.” Joint Economic Committee, United States Congress, Apr. 2016. Web. Accessed 8 Mar. 2022.

² Campbell, Todd. “Here’s How Much the Average Person Collects in Social Security Benefits.” The Motley Fool, The Motley Fool, 25 Jun. 2021. Web. Accessed 23 Feb. 2022.

³ Olya, Gabrielle. “8 steps women need to take to close the retirement gap.” GOBankingRates, GOBankingRates, 16 Dec. 2021. Web. Accessed 23 Feb. 2022.

⁴ Lalljee, Jason, and Hillary Hoffower. “Boomers Don’t Have Nearly Enough Retirement Savings, Especially Women.” Business Insider, Business Insider, 19 Jan. 2022. Web. Accessed 23 Feb. 2022.

⁵ Backman, Maurie. “3 Reasons You Might Regret Claiming Social Security in 2022.” MSA.com, The Motley Fool, 30 Dec. 2021. Web. Accessed 8 Mar. 2022.

⁶ Birken, Emily Guy, and John Schmidt. “6 Ways to Increase Your Social Security Benefits.” Forbes Advisor, Forbes Media, 23 Mar. 2021. Web. Accessed 8 Mar. 2022.

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