VALUE YOUR LIFE
As you saw in chapter 4, we don’t count women’s unpaid work in our GDP. This means there are no governmental safeguards for your retirement or to support you and your family in the event of illness or death. Since no one else will value your human capital as an unpaid caregiver, you must, which means you need to give special consideration to the long-term financial implications of stepping away from the paid workforce. Much as we may want Prince Charming to magically solve our problems, only you can take care of you. The following will help protect you if you do choose to pause your career.
Plan for Your Retirement
OK, so you’ve run the numbers and have decided you can pause. What’s your strategy for taking care of the wise old woman you will become? Or, more specifically, the wise old widow (or divorcee) you are unfortunately likely to become? The average life expectancy for American men is seventy-six years. For American women, it is eighty-one years.266 According to a 2014 Gallup poll, the average age Americans expect to retire is sixty-six, but the average age they actually do retire is closer to sixty-two.267 Based on the average, you’re likely to live about twenty years after the last paycheck comes in.
What does it mean if that paycheck has come in only intermittently in the forty or so years before you retire? What does it mean if that paycheck is part-time or from freelance gigs that don’t allow the worker to have access to a company savings plan? For women, it means that we aren’t saving enough.
A 2014 Vanguard study revealed that men have average and median retirement account balances that are 50 percent higher than that of women’s.268 According to a 2014 article in The Atlantic, data from Fidelity Investments’ 13.6 million participants tell a similar story: “While men have an average 401(k) account balance of $98,700, women lag at $67,400.”269 This is largely because men earn more money more consistently over time, but this also happens because most women don’t set money aside for their retirement while they are pausing.
If you do choose to pause, value your future self and continue to plan for your retirement. When I paused, I promptly set up a Roth IRA. I transferred all of the retirement savings I had accrued through my various full-time jobs into the account. Since then, I have consistently put the highest allowable amount each year into my IRA. On those years when I did not earn any income, I still transferred money to my account. Yes, that money came from my husband’s salary, but we valued my unpaid contribution to the family and paid into my retirement accordingly. I hope we both live a long time and die together, preferably in our sleep on the same night. But, I know the statistics are against me on that one, and while I joke with my children that I plan to move in with them once their dad is gone, I’d rather do it because I choose to, not because I have to.
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Get Life Insurance
I was dismayed to learn from a close friend that while her husband has a hefty life insurance policy that will ensure she is very, very well cared for if he were to pass away, she didn’t have a policy at all.
“What if you died first?” I asked her. “How will your husband support the family while he is grieving? What if he doesn’t want to return to work for a period of time so he can care for your children?”
I know of what I speak. My neighbor and friend lost his wife to a lengthy battle against breast cancer. He was heartbroken and his kids were inconsolable. He chose to pause his career while he and his sons grieved. It was the right choice for him. He has since remarried to a remarkable woman, and now his sons are all off to college. But while it all looks rosy now, he will tell you it was painful and hard at the time and that those years that he paused were essential to his family’s well-being. He needed financial security during those years and was lucky enough to have planned accordingly.
The Life Insurance Marketing and Research Association reports that, as of 2015, only 52 percent of American women have life insurance and when they do their policies are likely to be 31 percent lower in terms of dollar coverage than men’s.270 Nilufer Ahmed, senior research director for the research association, said in an article in the Omaha World-Herald that wives are more likely than husbands to be underinsured or to not have life insurance at all.
“There’s still the whole idea that if I don’t earn an income, maybe I shouldn’t be buying insurance, or there’s less of an impetus to buy,” Nilufer said.271
My neighbor would likely tell you that is a horrible mistake. Remember that old Mother’s Day Index? Your replacement value in the case of your untimely death truly does have a significant financial impact on your family.