On average, women live longer than men, so they need more retirement savings than their male counterparts.
But a recent GOBankingRates survey shows that women aren’t necessarily prepared and, in fact, many women have little to nothing saved for retirement. Here’s a look at the state of women and retirement savings by the numbers.
38% of Women Are Concerned About Outliving Their Savings
A new GOBankingRates survey found that 38% of women believe that they will outlive their savings and/or believe they have not saved up enough money for retirement; only 27% of men feel that a lack of savings is a concern when it comes to retirement.
Other retirement concerns among women include maintaining an income stream (24%), healthcare costs (22%) and having too much debt (17%).
37% of Women Have Put Money in a Savings Account for Retirement
The GOBankingRates survey found that the No.1 way women are preparing for retirement is by putting money into savings, with 37% of women saying they have done so. On average, 38% of all surveyed individuals ages 18 and over have put money away into a savings account for retirement.
There may be a couple of reasons why a savings account is the No.1 choice across the board. Firstly, ease of access — those who may lack financial knowledge can easily open up a savings account through their bank, which is less complicated than opening an investment account (only 17% of women have used investments, such as stocks, ETFs and mutual funds to help save for their retirement). Additionally, people may feel comfortable with savings accounts because they have total control of their money and are able to keep track of what goes in and out of their savings accounts.
Other ways women are saving for retirement include 401(k) and 403(b) plan contributions (31%), IRA contributions (18%), pension plans (17%) and certificates of deposit (12%). Alarmingly, 34% of women said they have taken no steps to financially prepare for retirement.
40% of Women Have Less Than $10,000 Saved for Retirement
A separate 2022 GOBankingRates survey found that the majority of women (40%) have less than $10,000 saved for retirement and an additional 30% have between $10,001 and $50,000 saved for retirement.
Although men are also not in great shape when it comes to retirement savings, the percentages of men who fall into those two pools are less than is the case for women — 31% of men have less than $10,000 saved for retirement and 24% have between $10,001 and $50,000.
There are numerous reasons why women tend to have less saved for retirement, one of which is that women often have career gaps — time when they lose access to workplace retirement plans and are likely not actively saving for retirement.
“Women often leave the workforce to care for children or even elderly parents,” said Michelle Patello, wealth management advisor at TIAA in Fort Collins, Colorado. “This break in employment often prevents them from saving consistently throughout their careers, and much of their lost earnings and savings will never be recovered.”
Another barrier is a lack of financial education.
“Financial literacy and planning lead to financial confidence, and traditionally, women have not been exposed to financial education in the same way as their male counterparts,” said Neha Mirchandani of BrightPlan, a financial wellness company.
“In fact, our early experiences with money set the tone and act as a powerful force throughout our financial lives. It’s often called our ‘money story’ or ‘money script,’ which is the impact of our childhood on how we feel about money and how we interact with it and manage it throughout our lives. If women don’t have a powerful childhood ‘money story,’ it can bleed into adulthood.”
12% of Women Believe They Can Never Afford To Retire
With most women having little to nothing saved for retirement, it’s not too surprising that the 2022 survey found that over 1 in 10 women believe they will never be able to retire. The percentage of women who believe they can never afford to retire is double the percentage of men who believe the same (12% versus 6%).
While this percentage may be based in reality, there may also be a psychological aspect to this feeling.
“Women are, on average, less confident than men about managing their money,” Mirchandani said.
33% of Women Haven’t Started Saving for Retirement
The 2022 GOBankingRates survey found that nearly one-third of women haven’t started saving for retirement; the percentage of men who haven’t started saving is a bit lower — 24%.
TIAA’s Patello emphasizes the importance for women to “start saving for retirement ASAP. Automatically deduct money from your paychecks and use it to build your retirement savings. This allows the money to compound.”
The easiest way to get started is to contribute to your employer-sponsored retirement plan if you have access to one.
“Women should save at least what their employers will match, which is often 3% to 5%,” Patello said. “If a woman makes $55,000 a year and saves 3% of that salary, their companies could match that 3%. That’s $1,650 from you and another $1,650 from them. If you don’t save that full 3%, you’re leaving free money on the table.”
23% of Women Can’t Budget Any of Their Salary for Retirement
One of the biggest barriers for women when it comes to saving for retirement is the gender wage gap. Because women are paid less on average, it is harder for them to find wiggle room in their budgets to put money aside for retirement. The 2022 survey found this is the case for nearly one-quarter of women. Meanwhile, only 13% of men said they were unable to put any of their salary toward retirement savings.
“It makes sense that women have less retirement savings than men because traditionally, women have been paid less than men,” said Shelly-Ann Eweka, CFP, ChFC, senior director of advice strategy at TIAA. “It’s 82 cents on the dollar for all women — Black women earn 63 cents on a dollar and Latina women earn 53 cents. Those stats are staggering.”
With rising costs and stagnant wages, it is getting even more challenging for women to set aside funds for long-term savings.
“You don’t have a retirement account if you’re struggling to pay your monthly bills,” Eweka said. “It’s a direct correlation. If you can’t keep up with monthly bills, saving for retirement is a luxury.”
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Methodology: GOBankingRates surveyed 1,045 Americans aged 18 and older from across the country between May 1 and May 4, 2023, asking seven different questions: (1) Please state your level of agreement for the statement: Mortgage is the best solution when buying a home.; (2) Have you ever personally owned an electric car?; (3) How likely are you to buy an electric car in the next 5 years?; (4) When was the last time you were in the market for a new car?; (5) Knowing it will save you gas money, how much more would you be willing to spend on an EV over a similar gas powered car?; (6) What area is your biggest concern during retirement planning?; and (7) What financial steps have you taken for retirement? (select all that apply). GOBankingRates used PureSpectrum’s survey platform to conduct the poll.