When the coronavirus pandemic first took hold, the stock market took a beating. Investment values plummeted overnight, and it took months for many investors to see their portfolios recover.
Stocks have regained their value and then some in the 12-month period following the start of the pandemic. Yet, in a Nationwide survey, 72% of women say the pandemic has had a negative impact on their retirement savings.
Some of that could boil down to the fact that women are heavily employed in hard-hit industries like restaurants, retail, and hospitality — industries that have had no choice but to implement mass layoffs over the past year. Women who lost their jobs may have slashed or cut out retirement plan contributions to cope with reduced hours or full-fledged unemployment.
Some women may have left the workforce during the pandemic not by choice, but due to a lack of child care. With so many schools closed for in-person learning, child care has been a major issue over the past year. That may have impacted women more so than men.
In fact, all told, as of January, women had lost an estimated 700,000 more jobs than men since the start of the pandemic, and there’s clearly a direct connection between that and battered retirement savings. That doesn’t mean all hope is lost for women, though. Here’s how they can catch up.
1. Fight for higher earnings
In 2020, women earned about $0.80 for every dollar the average man earned. Advocating for a fair wage can help women catch up on the retirement savings front. There’s a host of salary data out there that women shouldn’t hesitate to access and put in front of their employers. Those who can prove they’re statistically underpaid based on their job titles and experience level can make a case for a salary boost, which could open the door to increased retirement plan contributions.
2. Make smart investing choices
Several studies have found that women earn better returns on their investments than men and trade less impulsively. These qualities could help women maximize the money in their retirement accounts. Of course, women are also said to invest more conservatively than men, but stepping outside their comfort zone and putting their savings into stocks could help a lot of women grow significant wealth. An IRA with a balance of $50,000 could turn into $233,000 over 20 years if its investments generate an average annual 8% return during that time, which is just below the stock market’s historical average.
3. Work longer
Working longer gives women a chance to grow their retirement savings. It also serves the important purpose of allowing women to leave their existing savings untapped for longer. As a side benefit, extended time in the workforce could enable women to delay their Social Security benefits, boosting them by thousands of dollars a year in the process.
Women’s retirement savings may have taken a beating in the course of the pandemic. The good news, however, is that many still have a solid opportunity to recover and salvage their senior years.
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