Unique challenges for women investors

Due to a number of gender-based challenges, women may be playing catch-up when it comes to investing for retirement and other long-term financial goals.

Women continue to represent a growing share of household income. More than one-third of married women earn more than their husbands and 40 percent of women with children are the primary breadwinners in their families.

But even high net worth women cannot escape the gender-based challenges that may hinder their ability to ensure financial security in their later years. Consider the following factors affecting women as they invest for long-term financial goals such as retirement.

The Gender Gap–a Reality Check

• Income: Women who worked full-time and on salary earned $0.82 for every dollar men earned in 2012 – a considerable difference over the course of a lifetime. The disparity was widest for workers aged 45 to 54 years ($0.75 on the dollar) and narrowest for those aged 25 to 34 years.

• Employment: Women typically spend more years out of the workforce to care for family members. Studies estimate that 3 out of 4 informal caregivers are women, many of whom are middle-aged mothers who have cut back on their work hours, quit their jobs, or taken a leave of absence. Since traditional pension plans and Social Security benefits are generally determined by years of service, leaving work for periods of time often means lower retirement benefits.

• Retirement Income: The average annual pension benefit of women aged 65 and over is $13,225, compared with $20,434 for the average 65-year-old man. Furthermore, only 29.2 percent of women over 65 receive pension benefits at all.

• Social Security: On average, a retired female worker received an average monthly Social Security benefit of $1,134 during December 2013, compared with $1,451 for the average retired male. This 22 percent differential has held steady for the past five years.

• Longevity: Women tend to outlive men by about five years, and life expectancies continue to rise. In addition, according to U.S. Census Bureau data from 2012, women age 65 and over were three times as likely as men of the same age to be widowed (37 percent compared with 12 percent), and nearly three-quarters (73 percent) of women aged 85 and over were widowed, compared with 36 percent of men.

What does this mean to you? Simply that all women — whether single, married, divorced or widowed — should make investing for long-term financial goals a lifelong endeavor.