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Retirement planning issues for women
There are five retirement challenges that many women face when planning for their future.
All federal employees need education, and most would benefit from some experienced assistance when planning for retirement. This is true at every stage of their careers, regardless of age or gender. Today I want to highlight some issues unique to federally employed women.
According to the Women’s Institute for a Secure Retirement, there are five retirement challenges that many women face when planning for their future. Here is a modified version of this list as it may impact you, as a woman employed in federal service:
1. Women live longer than men.
- Longevity risk is real. Because women often live longer, this means if currently married, someday it may be “one of us” rather than “two of us.” This means one Social Security benefit stops, and the full pension benefit becomes a survivor annuity which is generally a little more than 50% pension benefit payable while the spouse was living. If single, the retirement savings will have to last longer due to the projected longer life expectancy.
- Out of 408,033 survivors of deceased federal employees, there are 361,739 widows and only 27,410 widowers. The average monthly annuity payable to a widow in 2022 was $1,831/month with an average age of 81.4 years. The remaining survivors were former spouses, children and those survivors having an insurable interest in the retiree.
2. Women earn less than men during working years.
- The federal government is already a step ahead of the private sector when it comes to pay equity, according to the Federal News Network. The national gender pay gap is 16%, while the federal pay gap is 5.6%, according to 2022 workforce data. In other words, in the federal workforce, women make about 94 cents for every dollar men make. This is better than the national rate of 84 cents for every dollar men make, and it has significantly improved from the 24.5% pay gap in 1992.
- According to 2023 OPM Data analyzed by the Partnership for Public Service, the overall federal workforce was 55% male and 45% female, compared to 53% male and 47% female in the U.S. labor force. In general, women are employed at lower grade levels, considerably more than their male counterparts. Women made up most of the federal workforce in GS-3 to GS-9 positions. Notably, 73% of GS-6 employees are female. Men comprised much of the workforce above the GS-10 level, the SES, and positions not on the GS pay scale. Only 39% of SES positions are filled by women. As the grade level grew higher, the%age of positions filled by women grew smaller.
3. Women receive significantly lower retirement benefits than men
- Almost 72% of monthly annuity benefits in 2022 were under $4,000/month (CSRS and FERS combined). At least 55.5% of those were paid to men. However, of the .2% of monthly retirement benefits paid at over $7,000/month, 70.1% of those benefits were paid to men.
- As women age, they become more vulnerable to poverty. The poverty rate for all women aged 65 and older is roughly 12% with a little more than 1 in 10 living in poverty. But for widowed women aged 65 and older, the poverty rate is much higher, with approximately 51% living on less than $22,000 a year.
4. Women have fewer years of earned income.
- According to the Bureau of Labor Statistics, in 2022, 67.9% of men ages 25 and older were employed, compared with 55.4% of women.
- While men have higher employment–population ratios than women at every level of educational attainment, the gap between men and women becomes smaller as educational attainment increases.
5. Women are more likely to work part-time jobs.
- As of January 2024, 89,960 federal employees work less than a full-time schedule (part-time, intermittent, and 193 employees in phased retirement).
- In federal employment, working part-time obviously reduces the salary of an employee, but it also reduces retirement income, ability to contribute to the TSP, and earnings used to compute Social Security retirement. In addition, part-time federal employees pay more of the government share for their health insurance and earn less annual and sick leave each pay period.
- According to the National Women’s Law Center:
- Nationwide, over 32.1 million people (about twice the population of New York) work part-time—approximately 22% of workers.
- Nearly six in ten part-time workers (59.1%) are women. There were more than 1 million fewer women working part time in 2021 than in 2019, before the pandemic began.
- Women are about 1.6 times more likely to work part time than men: 27.9% of all working women work part time, compared to 17.2% of all working men.
Here are some resources to learn more about staying financially secure in your life after retirement:
5 Things Every Woman Should Know About Social Security
What Every Woman Should Know about Social Security
5 Things Mothers Should Tell Daughters about Money and Retirement