The gender-based financial gap in retirement

It won’t come as news to any woman in medicine that women live longer, on average, than men. But what you may not have considered are the significant financial implications of this reality.

For the many female physicians who began their medical careers in the 1970s and ’80s—and have reached or are nearing retirement age—the AMA notes that “remarkably little research has been done to highlight the issues facing them.”^[]

Multiple issues at play

Fidelity Brokerage Services also makes note of the fact that women face a financial gender gap in retirement.^[]

As is well-covered, women in medicine often also face an ongoing salary gap throughout their careers, and are underrepresented in the highest paying medical specialties. In addition to this, there has traditionally been an investing gap between women and men, with women investing less money and doing so later in their careers, according to Money.com.^[]

As with the salary gap, the amount of money lost adds up over time as a result of these factors. Money.com’s 2018 projections indicated that the “real cost of the investing gap over a 35-year career span could be more than $1 million.”

This was found using an average salary of $103,000 for women, which is much less than nearly every full-time female physician makes per year. This means that the investing gap for female physicians is likely to be much more significant—potentially millions of dollars more over the course of a career.

Some female physicians are ‘afraid’ of retirement

As the study authors noted, “Information is needed regarding financial stressors faced by senior women physicians, as they may be more financially vulnerable in retirement than male colleagues.”

Combating these challenges takes awareness and careful planning. Reaching out to a certified financial planner or wealth manager can be of tremendous help in navigating the many facets of retirement planning.

Helpful tools

In a recent Women Talk Money webinar from Fidelity Investments, Ms. Alexandra Roca, CFP, a Workplace Financial Consultant at Fidelity, recommended that women save 15% of their pre-tax income throughout their careers “in order to maintain your current lifestyle in retirement.”

One way to be sure you are regularly setting aside savings for retirement is to automate your withdrawals. Another important tactic is to take full advantage of your employer-sponsored retirement plan, or set up a self-employed, tax-deferred, or tax-deductible plan if you run your own business.

Make sure you know your employer’s percentage match for the retirement plan they offer, and do the math to understand how much you would need to contribute to meet the maximum employer match.

You can also ask how long you would need to work for that employer in order to keep their matched money (called “vesting”). With some employers, for instance, you are fully vested from day one, meaning that your retirement contributions are fully matched and all yours to keep from the time you make your first contribution.

Being prepared for retirement is an ongoing process throughout your career, but even if you are starting later, you can strategize (often with the help of a financial planner) to play catch-up with your contributions and other vehicles in order to maximize your financial security and feel at ease financially with the retirement you deserve.