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In April, we focus on the pay disparity between men and women through Equal Pay Day.  Payment affects every aspect of a women’s retirement, estate assets, and ability to pay for long term care. Discrimination in a woman’s rate of pay, possibility for promotion, ability to get raises, and the availability of retirement packages impacts retirement income, the size of her Social Security retirement benefits, and what resources she will have available to pay for long term care.

There is an approximately 23% pay gap between men and women doing the same job (women make 77 cents per hour for every dollar a man makes at the same job). This means, over the course of a lifetime, a woman generates less income with which she can save for retirement or her long term care costs. This also means her Social Security retirement benefit will be smaller. In the cases where women have only a minimal work history, their Social Security retirement benefit is insignificant and upon the death of a spouse will only get a benefit increase based on a percentage of the deceased spouse.

Pay disparity is further complicated by the circumstances in a woman’s life that add additional burdens and damage to her ability to make a living, save for retirement and plan to pay for long term care benefits.  Among the many factors, there are four that significantly harm a woman’s ability to have a sustainable retirement and the resources to pay for long term care.

1.  Women more often shoulder the responsibility for raising children. This is a duty that comes without pay, and, often without the financial support of the other parent. This duty requires women to miss work, maintain a home, and attend school functions. Some women choose to be full-time parents and homemakers, thus eliminating their pay entirely for a period of time. While child rearing and homemaking are done out of love and dedication, they contribute significantly to the financial harm women will see later in life.

2.  Women are more often the unpaid caregivers for family members who need long term care services. Like child rearing, care-giving is duty without pay and often without financial support from other family members, including the individual who is receiving the services.  It requires the caregiver to reduce her work schedule or quit to accommodate the needs of the family member in need.  The caregiver also often pays for the expenses of the family member from her own financial resources.  To make matters worse, caregivers are at significantly increased risk of acquiring long term illnesses related to the stress of care giving that increase their medical costs as well as the need for expensive long term care.

3.  Fifty percent of women get divorced. Divorce is generally financially more devastating to the wife than the husband. “Woman’s work” such as homemaking, child rearing, and care giving is unpaid and largely disregarded in our society as having value. When a couple divorces, the husbands tends to have a longer, more stable work history with earned retirement and leave benefits because he has not engaged in any of the unpaid “women’s work.”  The woman tends to have a “spotty” work history, stale job skills, and no retirement savings because she has been maintaining the home and raising children. The wife also tends to get custody of the children, which mean the bulk of the emotional, physical, and financial responsibility for those children, further limiting her ability to maintain a job with the same salary and benefits as her ex-husband. However, the current property distribution, spousal support, and child support laws fail to adequately consider the value “women’s work”, leaving the woman at a significant financial disadvantage for having cared for her family. Some states, like Florida, have even attempted in recent years to make the support laws even more unfavorable to the homemaking spouse.

4.  Finally, women fail to make their long term financial stability a priority because they focus their attentions, talents, and energies on the stability of their home, children, and family. Because they don’t make their own financial stability a focus, they remain unaware of the long term financial impact of child rearing, homemaking, and care giving until a critical event forces them to address it. This leaves them with little or no time to remedy the damage.

While we spend a lot of time discussing the pay gap between men and women, women (and men who care about women in their families) need to focus on the circumstances in their lives that often lead to pay disparity or financial harm and what changes they must make to protect their financial future.  Women need to take protective actions for their financial future when they become the caregivers for family members, when they decide to have children, or they decide to give up their jobs/careers to raise a family.  Prior to taking on any of these responsibilities and duties, women should talk to their attorney and financial planner to ensure they are doing what is necessary to secure their retirement, ability to pay for their long term care, and to leave a legacy for their children and family.