The shocking number of jobs that were lost by women in the coronavirus epidemic is only one part of the story.
It’s well-known that women are the ones who have suffered the most from the country’s job losses. They’re down 5.3 million to 4.6 million, despite the economy recovering somewhat from its COVID-19 lows. This is due to the fact that remote work is not possible in hard-hit industries like restaurants, hotels, and retail stores, where women dominate. Fidelity Investments’ recent survey found that nearly half of all 10 working mothers are still considering doing so.
However, the long-term effects of the pandemic on a person’s financial security and career prospects is not discussed as often.
“Being in a position to take a career break by choice can be considered a privilege,”Lorna Kapusta was the Fidelity head for women investors. “But we know for many in times of crisis like this one that stepping back from work is more like a necessity. Either way, it’s critically important to understand the decision’s impact on your savings today and into the future, so you can take steps to address it.”
Fidelity did a comprehensive analysis of the effect that even a short career break could have upon retirement savings.
Exhibit Nr. 1:Take yours! “break”When you turned 35, your annual income was $50,000. However, you had to accept a slightly lower starting salary in order to return to the workforce. If you assume a conservative 4.5% annual growth rate, and add in lost retirement contributions (including a match of 3 percent from your employer) your 401(k would be $106,469 smaller ($733,325 vs $839,594) when you turn 67.
Exhibit Nr. Exhibit No. 2:You can substitute a $75,000 salary for a $159,702 or $1,099 6,679 instead of $1,259 381.
Exhibit Nr. 3:Even more impressive is $100,000 ($212,936, $1,466,233 vs. £1,679,169).
Don’t forget about the lost Social Security Contributions. “Your benefit is calculated based on your top 35 years of earnings,”Kapusta. “So if you work fewer years, have a lower salary, or don’t reach the minimum eligibility, you may have a smaller check when it comes time to collect in retirement.” All of which helps explain the impetus for launching Fidelity’s weekly Q&A discussion series called “Women Talk Money” Each 30-minute interactive episode airs live on Zoom every Wednesday at noon ET. It is also available later on demand.
“It’s real talk to help answer women’s most pressing money questions right now — no jargon or judgment,”Kapusta said that the six-part archived program is available. video seriesIt is a must-see for anyone who wants to learn more. key factorsIt can have a major impact on women’s financial futures.
A historical perspective is also offered. The Labor Department started collecting such data in 1948. Only a third of women were employed when it began. This number had almost doubled by 1990.
Today? Today, the ratio for women working is below 57 percent. This is the first time this has happened since 1988.