According to a 2015 OECD study, the risk for German women to slide into old-age poverty is just as high as the general average risk, which is between 13 and 19%. There are, however, specific groups among women that have a higher risk than others, with single women leading the way. The threat of the women’s pension gap, which is one of the main reasons for old-age poverty among women, among single women is above 25%. Whereas divorced women, widows, and married women have slighter less risks of 16, 14, and 4.5%, respectively.
Since 2015, the amount of single women pensioners that rely on basic security benefits (unemployment benefit II or Hartz IV) has verifiably increased. Prognoses assume that this number will have nearly doubled by 2036 and affect 28% of all single women. This is, among other reasons, due to the fact that statutory pensions will decline by 16% until 2030.
Reasons For Old-Age Poverty Among Women
There are several reasons für old-age poverty among women. Along with a higher life expectancy and lesser tendency to tackle their own retirement security, the main reasons for the women’s pension gap are the career breaks women tend to make more often due to pregnancy and child-care, as well as their smaller income in regards to men.
It is true, of course, that in most European countries, women continue to be better educated and employment figures among women keep rising. This will lead to changes in female income perspectives in the long run. Yet, traditional and rigid pension systems still expose women to disadvantages throughout their career life. It is, hence, up to politics to even up the women’s pension gap. Supposedly, the countries will adapt their pension systems to modern women’s lives over time, but there’s still a long road ahead of us. And even in countries that have managed to reduce both, their gender employment gap and their gender pay gap, discriminations for women on the labor market remain.
This means:
even, if younger women might be entitled to higher pensions in the future, inequality is still an important factor.
The Meaning Of The Gender Pension Gap
The gender pension gap refers to the monetary difference in retirement income between women and men. It’s represented in percent. The gender pension gap is an immediate consequence of the gender pay gap.
In 2012, the gender pension gap within the EU was 38%. That means, female pensioners in the EU received 38% less money on average than their male counterparts. There are rather significant differences between the countries, however, that hugely influences the meaning of the gender pension gap in each individual nation.
In some member states, the women’s pension gap was as low as 4%. In others, it was an alarming 46%. Generally, men’s pension income is higher than women’s in 28 EU states. Estonia showed the smallest gender pension gap with a 5% difference, it is, however, a country, where pensions are very, very low altogether. In rich Luxemburg the gender pension gap in 2012 was an astonishing 45%, in the Netherlands it was 42%, in Austria 39%, and in France 36%.
Apart from the differences within the EU nations, the situation for women generally is an unfavorable one. The women’s pension gap is the result of increasing inequalities that women have to deal with during their lives and in different economic, social, and cultural frameworks.
- Reason no. 1 for the women’s pension gap is that women on average earn noticeably less than men.
- Reason no. 2 is that consisting pension systems are still focussing on the traditional family model with the man being the provider and the woman being the caregiver. Usually, women are still primarily responsible for household tasks. On average, a European woman spends 26 hours per week completing homework. A man just about 9 hours.
- Reason no. 3 that leads to old-age poverty among women is that we tend to interrupt our careers more often than men in order to care for our family and kids. Not only does this affect our hourly pay, but also our future incomes and, thus, pension entitlements. This fact, together with the job market offers, causes us to work far more often in part-time jobs than men: 1 in 3 women as against 1 in 10 men.
- Reason no. 4 is often left out: the 2008 financial crisis deeply affected European pension systems. The pressure on public spending forced several governments to increase retiring age and, at the same time, decrease the pension entitlements. This often had dramatic impact on the citizens’ well-being. And while pension rates decline, poverty increases. Especially old-age poverty among women.
- Reason no. 5 for the increasing meaning of the gender pension gap for women is their 5 to 8 years longer life expectancy. That’s half a decade more spendings on rent, clothing, food, utilities, vacations, health care, and so forth. Basically, women have to budget a longer time than men with far less money.
How To Break The Vicious Circle Of Old-Age Poverty Among Women
Realize the signs of the time and take care of yourself. That does not only mean that you should make use of company retirement planning offers, but also that you
- now your worth and improve your income situation: re-negotiate your salary regularly, keep educating yourself, apply for better positions.
- start as early as possible to secure your future. It’s never too late to start saving and investing, but of course it’s the earlier the better.
- take a look at your expenses and do your math. Find hidden savings potential in you insurance policies, electricity and internet provider, etc. A penny saved is a penny earned.
- define tangible, concrete goals. Get an idea on what kind of life you want to lead at an old age, which means you need to achieve that living standard, and how to reach these goals.
- don’t lose time and make 2020 your investment year in order to avert the danger of imminent old-age poverty among women! Our experts are here to help:
A first assessment is free, so take your chance and launch your personal investment success story with FinMarie!
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