Half of Mothers Have Little or No Retirement Savings

Kiplinger Consumer News Service

On Mother’s Day each year, billions of dollars are spent on moms nationwide — the National Retail Foundation estimates that just over $274 is spent, per person, to show moms some love. And this year, estimates are that consumers plan to shell out $35.7 billion for Mother’s Day celebrations.

But, at the same time, data from the Financial Health Network and a report from Century Foundation show that millions of mothers face retirement insecurity. Nearly half of all moms say they have little to no retirement savings.

Pink Tax: What Does Price Discrimination Cost Women?

A separate survey backed by the Nationwide Retirement Institute highlights similar concerns.

More than 80% of women surveyed reported a need to add to their income because of their retirement savings.
Nearly half (46%) said they would continue working in some capacity in retirement to supplement income out of necessity.

In a statement accompanying the survey, Ann Blair, senior VP of Financial Services Marketing for Nationwide said, “It’s important to recognize and consider the unique retirement challenges facing women.”

Mother’s Day Retirement Planning for Moms

Some of those unique challenges stem from the many reasons why so many mothers struggle to save money. For example, the COVID-19 pandemic disproportionately impacted women — many had to leave their jobs to care for their children. Those job interruptions meant that women had inconsistent access to their normal pay and employer-sponsored 401(k) plans.

Also, the gender pay gap (i.e., a phenomenon where women are paid less for the same work done by men) continues. According to federal data, women receive about 82 cents for every dollar paid to men. That’s true even though 54% of women reportedly outearn their partners, and many women expect to be the breadwinner in their households.

401(k) Plans: 10 Things You Should Know

Additionally, high inflation in the past couple of years has caused the costs of essential items like groceries and gas to skyrocket. Childcare costs have also continued to soar. A recent report found that even though the pandemic has been declared over, women continue to leave the workforce due to what nearly 8 in 10 mothers reportedly describe as crushing childcare costs. Women still tend to take on greater responsibility for childcare and household responsibilities, according to Pew.

Still, with retirement savings, data show that more fathers have retirement accounts than mothers. And mothers that do have 401(k)s, IRAs, or other tax-deferred retirement savings accounts are often unable to contribute as much due to lower pay and other financial obligations. This can be problematic because, as Blair points out, women “live longer and typically need to fund more years in retirement than men.”

How Can Women Worried About Retirement Stay on Track?

Some experts advise that to retire comfortably, workers need access to anywhere from seven to 12 times their previous annual salary. That calculation can be challenging for stay-at-home moms, for example, and others who have been out of the workforce for a long time to care for children. Also, in every case, how much money you need to retire will depend on several factors, including your personal financial goals, desired lifestyle, and how long you have until retirement.

Still, it’s sometimes helpful to know what other people have saved for retirement. In this case, studies show that moms are not alone in having little to no retirement savings. According to an Anytime Estimate Retirement Survey:

Only 14% of people in the U.S. have $100,000 saved for retirement.
About 16% of people surveyed had nothing saved for retirement.
Women were 71% more likely to say that they wouldn’t be able to retire.

How to Start to Save for Retirement

So, what can you do if you have little or no retirement savings? Here are a few things to consider.

Get support and ask questions. If you don’t have a trusted and knowledgeable financial advisor who can help you plan for your future, try to find one. For some, this could be a great friend who happens to be a financial planner or someone you used to work with who explains investing well. Some communities have financial assistance centers or offer planning sessions where you can consult with a professional for free.

Ask questions about ways to get started with saving and investing and the best ways to boost your financial outlook.
When you do this, keep in mind any life changes you think might be on the horizon (like plans to have a child, send a child to college, or buy a car or a home).
Also, note any personal goals tied to finances.

How to Estimate Income You’ll Need for Retirement

Do what you can today with what you have. When dealing with essential and sometimes high expenses, it can feel like you can’t save a dime. But take a quiet moment to look at your income and your budget. Setting aside a small amount each week or month can make a difference. So, start small and do what you can now with what you have.

If you can’t find room in your current budget for savings, try to make small changes to your expenses.
Or, try to find a positive way to bring in a little extra income.

Automate your bills and savings if you can. If you have a job that offers a “traditional” paycheck, automatically divert a bit of your pay to your savings account or an employer-sponsored retirement savings account. The more automatic the process is, the less you will have to think about it, and the easier it will be to plan each month as though that money never came into your spending account.

If your pay is inconsistent or you aren’t working, try to monitor your income and expenses formally through an app or a spreadsheet.
You can’t take control of your finances if you don’t know what you are dealing with. Having all the information in one easy-to-access file or app can make it easier.

Can the Earned Income Tax Credit Help You?

Take advantage of tax credits and deductions. Keep in mind that there are several tax credits and deductions that you may qualify for and that you should take advantage of. Some tax credits are refundable, so you essentially get money back, for example, if the amount of the credit exceeds your tax liability.

For moms, this might mean claiming dependents, looking at the child tax credit, and claiming credits for dependent care.
Consider the Earned Income Tax Credit (EITC) if you have a low to moderate income.

And of course, when and if you can contribute to an IRA or 410(k), remember that those retirement plan contributions can reduce your taxable income, which could ultimately result in long-term savings.

When is Mother’s Day?

And if you’re wondering, this year Mother’s Day is Sunday, May 14, 2023.

======