So here's what you need to do: Just save a lot more while earning a lot less.
While both men and women face big retirement-savings challenges, the hurdle is higher for many women. To have a decent standard of living in old age, women, who earn on average 78 cents to a man's dollar, need to save $126 for every $100 men do.
That's the conclusion of a report analyzing savings shortfalls faced by both genders.
Financial Finesse, which provides financial education programs to more than 600 organizations, examined data on median income, retirement savings, life expectancy, 401(k) salary deferral rates, and projected health-care costs for a woman and a man, each 45 years old.
The goal: Figure out how much each needed in order to retire at age 65 and live on 70 percent of his or her pre-retirement income.
The gap that emerged between the sexes: 26 percent. A man's retirement shortfall was more than $212,000. A woman's? More than $268,000.
And that's just how to reach 70 percent of pre-retirement income. It doesn't take into account what retirement will actually cost, which is where the gap turns into a chasm. The report used numbers from the Bureau of Labor Statistics' consumer expenditure survey focusing on expenditures for people 65 and older.
Against those averages, Financial Finesse figures that to fund projected average retirement expenses at age 65, the median 45-year-old man needs to save an additional $270,000 or so. The woman is short $522,000.
"Lower Social Security benefits, longer life expectancy, and lower retirement savings balances because of lower-paying jobs all compound into this incredibly large shortfall," said Gregory Ward, a senior financial planner with Financial Finesse.
The report also looked at gender differences in financial attitudes, based on employee responses in more than 12,000 questionnaires. Comparing responses from 2012 with those from 2014 showed that women were narrowing the gender gap in most areas the questionnaire measured, while men were either standing still or dipping slightly.
The overall point of the report isn't to offer specific savings goals but to encourage workers to figure out what goal would realistically suit them. About 60 percent of employees haven't run projections to see what they'll need to live on in retirement, Ward said.
While estimating future expenses is never easy, the websites of many large mutual fund companies have calculators to help investors figure out the income they'll need in retirement. Better retirement planning tools are showing up on more 401(k) plan sites as well.
For women in particular, taking the time to focus on retirement needs early can pay off with a lot more money — and a lot less worry — later in life.
In general, 70 percent is a low percentage of income replacement for retirees to target. The calculation by Financial Finesse includes projected health-care costs, which makes it more realistic.
A big reason some financial planners recommend trying to replace 100 percent of pre-retirement income is that many retirees underestimate health-care costs.
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