Women are on average out of the workforce 12 years to care for children or an older relative. That’s 12 years of lost salary, benefits, and savings.
To break it down further, that’s 3,120 days of missed work, during which they serve – unpaid – at home raising children or caring for elderly parents.
That’s one of the reasons women struggle to set aside enough savings for their retirement, and why – in retirement – they are more likely to live in poverty (80% more likely than men, to be exact).
We’ve shared tips in previous blogs on how women can stay strong financially, even if they leave work to start a family or take care of other family members.
Here’s 5 winning strategies:
Stay at home survival skills: If you’re a stay-at-home spouse, there are plenty of ways to keep your retirement kitty growing. Check out our earlier article on 5 ways a stay-at-home spouse can keep up. We have clients who have this mastered. They are stay-at-home moms, but don’t miss a beat. They manage the family finances, keep the budget on track, coordinate funding the Roth IRAs, and make sure their daughters get a head start by setting up investment accounts for their summer earnings. Keep in mind that you can contribute to a spousal IRA if you’re married even if you don’t work.
Be the change: Advocate for flexible work schedules, part-time work, quality child care and equal pay, all of which will help women stay engaged even while they care for their family. Oh, and don’t forget family leave for dads and “relaunch” programs for women re-entering the workforce.
Do the math before you quit: Realize what’s on the table before you take time off of work. One economist stopped to calculate what his wife’s lost salary would add up to. The results surprised him: “He had assumed that taking a break from work might cost about as much as a car, but, in fact, it was “closer to a house,” he said. A fairly short 5-year break from work ended up costing almost $470,000 in lost earnings. That doesn’t mean you shouldn’t do it, but make sure you understand the ramifications and have a plan to stay on course.
Don’t forget Plan B: Don’t want to be a downer, but many women take time off work and sacrifice their career and significant earnings, only to divorce later in life and get left holding the proverbial bag. None of us knows where our road will end up, but it’s not a bad idea to consider several contingencies so whatever happens, you can remain self-sufficient and solvent.
Make it up later: If you head back to work later, consider working longer and delay your retirement. That will put a few more dollars in your retirement accounts and help boost Social Security benefits which are based on up to 35 years of earnings.