Retirement Comparison: Why Women Have Less Savings Than Men

Portrait of worried senior woman sitting on sofa at home stock photo
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Women statistically outlive men by more than five years in the U.S. Yet when it comes to saving for their retirement years, women are significantly less prepared.

When asked in a recent survey how much people currently have saved for retirement, 43% of women said they had not started saving at all, compared to 29% of men. GOBankingRates surveyed 1,005 Americans aged 18 and over across the country in January.

Common rules of thumb for retirement say that you should have 2 to 3 times your annual income saved by the time you reach age 40, and 3 to 4 times your income by age 45. A general overall target is often said to be $1 million.

In our survey, just 2.4% of men and 1.5% of women had reached $1 million in retirement savings. Five percent of women and 9% of men had saved between $100,000 and $300,000, and 25% of women and 29% of men had saved just $10,000 or less. Let’s take a closer look at this retirement savings comparison.

Why Are Women Behind?

Catherine Collinson, CEO and president of the TransAmerica Center for Retirement Studies, said that one of the primary reasons for women’s lack of retirement is due to their roles as caregivers. “They’re more likely to be stay-at-home moms or caregivers or homemakers. When one is not out in the workforce earning income, they’re less likely to save and have the resources to save,” Collinson said. “The work they do is invaluable, but it comes without a paycheck.”

Are You Retirement Ready?

Within the workforce as well, there are many structural impediments to women saving for retirement.

One is that when employers offer 401(k) plans, it’s typically only to full-time employees — and women are more likely to work part-time. “When a woman steps out of the workforce to do things like care for a child or aging relative, it can often be difficult to jump back in,” Collinson said.

According to the National Women’s Law Center, nearly 6 in 10 part-time workers are women, and part-time workers are three times more likely to hold low-paying jobs. Women in such jobs are also far more likely to be women of color, who are disproportionately impacted by roadblocks to better financial health in general.

Even for women who are in the workforce, either full-time or part-time, many aren’t prioritizing saving for retirement. Just 18% of women in our survey said retirement savings was their primary financial goal. Twenty-six percent said it was covering basic expenses, followed by paying off debt (20%).

TransAmerica Institute data shows that among those offered a 401(k) or similar plan through their employer, women lag men in participation (72% of women vs. 82% of men). Plus, women contribute to their plans at a 10% lower rate.

And that, says Collinson, goes back to the gender pay gap.

“Looking at it from a broad economic perspective, the gender pay gap implies that women have less income and less money available to save, and are less likely to have access to employer-sponsored retirement benefits — which is a triple whammy,” she said.

Are You Retirement Ready?

Lauren Bringle, an accredited financial counselor at Self Financial, which offers tools for building good credit, also attributes the weaker focus on retirement savings to the way that women are raised and spoken to about money.

“Traditionally, women are told: spend less, cut back, save money, make a budget. Those are all very important,” Bringle said. “But compare that to how men are spoken to. They’re told: earn more, get out there, invest, grow your money. Both are valid, but because of this resource gap, women need to also shift their perspectives toward earning more, especially if we keep coming back to this question of how women can save for retirement if they can’t cover their basic needs.”

How Can Women Catch Up?

Addressing the retirement savings gap requires systematic societal and structural changes, such as closing the overall gender pay gap and expanding access to retirement plans, Collinson says. But women also need to take matters into their own hands. She says that means seeking out information, educating themselves, and having everyday conversations with their friends and family about money to strip away the taboos that keep women in the dark. 

“Many women need a vote of confidence, but they’re smart and they can do it,” Collinson said. “They have the brainpower and the ingenuity to be able to find ways to save money that they haven’t thought of already.” 

Are You Retirement Ready?

In order to get to a point where basic needs are covered so that retirement can become a focus, Bringle advises people to start with a budget. “Without a budget, it can be easy to overlook where you have some wiggle room to reallocate some money to savings or cut back,” she said.

That’s an important frame of reference to determine whether you need to spend less, earn more, or maybe strategize solutions to accomplish both. 

“Don’t underestimate the small changes,” Bringle said. “Be willing to ask questions, find tools that can help you, and remember that you don’t have to do it perfectly — which I think can be very daunting for women in particular. Even making these tiny changes on a daily basis can really add up over time to big wins.”

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