After our son was born, I decided to leave a full-time job that I grown dissatisfied with. For the next seven years, I did freelance work and ran a home-based business that never brought in much money.
During those seven years, I had time at home and I gained experience that I was able to parlay into a better job when I was ready to return to full-time employment. But what I didn't do during that time was save money for retirement.
Now I find myself worrying that I won't be able to "catch up" from that seven-year savings drought.
I have a friend who remained employed full-time while raising three children. But a few years ago, she gained legal custody of her granddaughter and quit her job to become what she calls "a professional grandma." She wonders what her unplanned early exit from the workplace will do to her future retirement.
We women are not alone in our concerns, according to LIMRA Secure Retirement Institute. A new LIMRA SRI study found that half of working women who have left their employment to take care of a family member (parent, child, etc.) are worried about the impact their leave will have to their retirement security.
Most of the women I know who make the choice to stay home and take care of their loved ones would say they made the right decision for their families. But when retirement age looms, these women realize that their caregiving careers didn't come with a pension plan.
On a more positive note, LIMRA found that many women have taken steps to make sure they would have funds for retirement despite their employment gaps. Forty percent of working women proactively compensated for these gaps by:
- Saving additional money in a non-workplace savings plan or account – 19 percent;
- Increasing workplace retirement savings rate prior to or following their leave – 15 percent;
- Increasing spouse/partner’s workplace retirement savings rate before or after taking leave – 14 percent
Even after their children grow up, the potential for women having to leave the workforce to care for family is still there. Many women find themselves exiting employment to become the caregiver for an ill spouse or parent. The financial cost to this can be high.
The MetLife Mature Market Institute estimates that the cost in lost wages and Social Security benefits could be as high as $324,044 for women in their 50s who had to stop working.
Caring for family members has a special set of rewards and challenges, but an at-risk retirement should not be one of those challenges. Women need professional advice to help them mitigate their special retirement risks.
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].
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