The Retirement Gender Gap: Expert Explains Why Women Face Bigger Challenges

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“I can’t make it into work today,” was something I often heard from female colleagues in their 30s and 40s when I worked as an attorney. Childcare falling through or a sick child at home were common reasons. I related since I was not only a caregiver to my toddler daughter, but also to my father, who was sick with a terminal illness.

As a retirement expert, I’ve watched many of my friends step away from their careers because of the high cost of childcare. However, this decision, which may appear like the more practical approach, has implications for those same women who are now close to retiring. 

A recent Transamerica Center for Retirement Studies survey found that women have accumulated roughly half the retirement savings of men, with median household balances of $56,000 compared to $92,000. This gap is alarming, yet unsurprising. I know countless women whose choices in their 30s and 40s continue to shape their retirement savings today.

Now, as a certified financial health counselor, there are five pieces of advice I would offer my younger working self and any woman looking to close the retirement gap sooner rather than later. 

Here’s what I would have done differently:

1. Prioritize retirement savings early and plan for hidden costs like healthcare and long-term care.
2. Build confidence in investing.
3. Plan for caregiving before it disrupts your finances.
4. Prepare for longevity.
5. Seek professional financial guidance.

What the Numbers Show

According to the statistics, only 18% of women felt confident about their retirement. However, when asked if women felt “somewhat” confident about retirement, those numbers were on par with those of males.

The gap between women and men widens when retirement savings increase.

Why the Retirement Savings Gap Remains Stubbornly High

Giving advice to my younger self means looking at why the retirement savings gap is so prominent. I know I became swallowed by the vortex of caregiving, but there are other factors that contribute to the disparities between retirement savings for women and men. 

Caregiving and Career Interruptions

Like many women, I stepped away from work because of caregiving demands. These breaks, whether brief or extended, can have lasting financial impacts.

I wasn’t alone in this experience. Statistics show that 43% of women have served as caregivers during their careers, compared with 35% of men. What I didn’t consider at the time was how this could impact my long-term future.

• Not only did I lose out on wages, but I also missed potential 401(k) contributions offered by the employer.
• Because retirement contributions grow over time, my male counterparts benefited from consistent savings in their 20s and 30s. I, on the other hand, faced a triple penalty of lost wages, missed employer contributions and reduced compound growth. 

Earnings Gaps and Workplace Dynamics

According to a recent Pew Research Center study, women earn an average of 85% of what men earn.

• Because women earn less than men, their retirement contributions are proportionally smaller, which directly widens the savings gap.
• When I left my job as an attorney to care for my toddler daughter, it affected my ability to advocate for raises and bonuses. Women who take career breaks often face stalled advancement, while men who remain in the workforce continue progressing.

I knew many women who fell off the partnership track at their law firms because they shifted to part-time work or took a leave of absence.

• Lack of tenure leads to reduced retirement savings.
• It can also result in lower Social Security benefits because those earnings are calculated over one’s working years. 

Risk Tolerance and Financial Confidence

I’ve always approached investing cautiously, which may stem from my upbringing and being wary of taking huge financial risks.

• Studies show that women tend to save more, but they may not take full advantage of higher-growth investments because they shy away from risk.
• Many women hold cash or lean toward certificates of deposit (CDs) and bonds. This behavior, especially in younger years, can stall retirement savings.

If women invest conservatively during their earning years, their savings won’t keep up with inflation and could fall short in retirement. A lack of financial confidence can also make it harder for women to take a more growth-oriented approach to investing.  

Longevity and the Cost of Aging

As of 2021, women tend to live six years longer than men. This means that their retirement nest egg must last longer. For women, the possibility of outliving their savings becomes a real concern.

• Women should plan on a retirement that lasts at least 30 years.
• As life expectancy increases, women must prepare for higher healthcare costs.

Generally, women face higher healthcare costs in retirement than men do. 

How Women Can Prepare for 2026 and Beyond

Only 18% of women are very confident that they will be able to retire comfortably, according to the Transamerica survey. That raises an important question: What can women do to better prepare for retirement? 

1. Prioritize Retirement Savings Early — Even in Small Amounts

Women can be proactive about improving their retirement outlook, but the key is to start now. The sooner you begin saving, the sooner your money can compound.

Here are three ways you can act now: 

• Automate your savings: When I started working, I set up automatic payroll deductions into my 401(k). Even if you can’t afford a large percentage, starting with a small amount helps build momentum.
• Capture the employer match: If your employer offers a match, contribute enough to receive the full benefit.
• Open a spousal individual retirement account (IRA): If you take time off for caregiving, contributing to a spousal IRA keeps your retirement savings growing.  

2. Build Confidence in Investing

As much as it may make you feel uncomfortable, you need to develop a growth mindset when it comes to investing. Here’s how to get started:

• Adopt a growth mindset: In my late 30s, I shifted my mindset toward investing in stocks, which helped my portfolio better keep pace with inflation. 
• Diversify your investments: Avoid concentrating your savings in a single type of investment. Consider exchange-traded funds (ETFs), precious metals and low-cost index funds. 
• Advocate for your earnings: Asking for a raise may feel intimidating, but earning more increases your ability to save more. Over time, this can have a meaningful impact on your retirement.

3. Plan for Caregiving Before It Disrupts Finances

Planning for retirement can feel overwhelming when you’re having a baby or taking care of a loved one, but putting it off can hurt your finances later. Here are proactive measures to take: 

• Create a caregiving fund: Early in your career, set aside money in a separate savings account to use if you need to take time away from work. This helps you avoid tapping into retirement accounts. 
• Avoid retirement account withdrawals: If you leave your job, resist the urge to cash out your 401(k). Instead, roll it over to an IRA so that the funds can grow tax-deferred. 
• Review Social Security benefits: Career breaks can reduce your future benefits. If you’re married, discuss how your spouse’s contributions might help offset lower earnings years.

4. Prepare for Longevity

Women tend to live longer than men, so it’s important to plan for a retirement that lasts decades. Keep these two considerations in mind:

• Prepare for a long retirement: Plan for a 30-year retirement and build a budget that will last into your 80s and 90s. 
• Factor in healthcare: Research Medicare costs, supplemental insurance and long-term care. Use a health savings account (HSA) to triple your tax advantage.

5. Seek Professional Guidance

If you’re unclear on how to maximize your retirement, consider talking to a fiduciary advisor, as well as a tax attorney.

A holistic approach should address Social Security projections, investment allocations, estate planning and tax implications. 

Final Take

Women face a retirement gap due to several external factors, including caregiving responsibilities, being paid less and longer life expectancy. For women to narrow the retirement gap, it’s important to invest aggressively, automate funds into a 401(k) and IRA, and plan ahead for caregiving breaks that could interrupt your income.

Even as a retirement expert, I’ve made missteps in the past regarding how I handled my savings. I did take a step back from my career to be a caregiver and didn’t always take the advice I now offer to other women. But my goal isn’t just to highlight past mistakes. The larger message is that it’s not too late for women who find themselves in a situation I faced in my 30s and 40s. Being proactive about your funds now is an empowering pathway to a more secure retirement.

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