Things don't look good for the state of women's financial well-being into retirement, especially considering that women live longer than men.
And if women were expecting inheritances and gifts to help ease financial burdens, there’s a plot twist.
A recent FINRA Foundation National Financial Capability Study found that women are less likely than men to get intergenerational wealth transfers of inheritances and gifts during their lifetime.
The FINRA study looked at wealth transfers and inter vivos gifts (during the giver’s lifetime) of $10,000 or more. These gifts included those from parents or grandparents to pay for expenses like college tuition or a wedding.
“Even though women are more likely to have a college degree than men, it doesn’t necessarily translate into assets,” Alison Salka, senior vice president and head of research at LIMRA, told Yahoo Money. “Women control less wealth and assets than men and are more likely to take time off from work due to having children and caregiving, limiting promotion opportunities.”
Men were more likely to benefit from the financial security associated with intergenerational wealth transfers than women, even if the wealth transfer hadn't taken place yet.
The FINRA study showed that 67% of those who received or expected to receive an inheritance were able to make ends meet each month compared to 48% of those not expecting an inheritance. Furthermore, 51% of those getting an inheritance reported spending less than their income.
The inheritance gap adds to a larger disparity women face when planning for retirement.
Women have 30% less income than men when they retire, according to a 2022 TIAA Financial Wellness Survey. The gender pay gap exacerbates the problem because money saved from smaller pay can mean drastically lower savings when compounded over time.
“Women’s financial wellness will never reach parity with men due to the gender pay gap,” Salka said. “During the pandemic more women left jobs to take care of children and aging parents. The pandemic exposed economic vulnerable groups like women.”
This means many women will not be able to afford retirement, have a retirement savings gap, or need to rely on other means of support in their golden years.
The disparity in wealth transfers to women is alarming considering their financial impact on U.S. households and the other hurdles they face when it comes to saving for retirement. For instance:
Just 31% of women are saving for retirement, compared to 44% of men, according to the TIAA study.
Half of all households are headed by women, even among married households, and 46.1% of women are the main breadwinner, according to an Urban Institute study.
70% of households with children under 18 rely on women’s salaries, according to the Bureau of Labor Statistics.
Women primarily make up the one in five workers who are unpaid caregivers. These caregivers are more likely to need to withdraw money from a retirement account for non-retirement purposes, stop saving for retirement, delay retirement, or determine they can never retire.
FINRA’s study also showed that 26% of adults aged 18-34 took a hardship withdrawal from their retirement accounts in the last 12 months. Those with lower incomes are more likely to take a hardship withdrawal.
Ronda is a personal finance senior reporter for Yahoo Money and attorney with experience in law, insurance, education, and government. Follow her on Twitter @writesronda