Women Are Saving Less for Retirement but Living Longer

July

Women Are Saving Less for Retirement but Living Longer

July 15, 2024

Women are saving less for retirement than men – and not just by a little.

Prudential’s 2024 Pulse of the American Retiree survey found, “Across all age groups, women are particularly vulnerable, with less than a third the median savings of men. They are nearly three times as likely to delay retirement due to caregiving duties.”¹

Take a look at the following recent stats that show women are saving less.

“Men had saved a median of $157,000 for retirement, women had only set aside $50,000.”²
“46% of men surveyed said they were looking forward to retirement and had more plans, compared with 27% of women polled.”³
“On average, women retire with a 30% lower balance in their 401(k) plans than men do.”⁴
A 2024 Goldman Sachs report found more than a quarter of women (28%) are saving less than $50,000 for retirement. “Assuming a 4% withdrawal rate, $50,000 in retirement savings provides $2,000 of income per year.”⁵
“Half of women say they feel ‘uncertain’ or ‘worried’ when they think about how prepared they are for health costs later in life.”⁶
43% of working women report their savings are behind schedule.⁷
More than half of women workers, or 57%, feel they don’t have enough income to save for retirement, and only 19% are “very confident” that they will be able to fully retire with a comfortable lifestyle.⁸

Catherine Collinson, CEO and president of Transamerica Institute and TCRS, told CNBC, “Today’s women are more educated and enjoy unimaginable career opportunities than previous generations. […] Yet, despite these advancements, women continue to be at greater risk than men of not achieving a financially secure retirement.”⁹

As you can see, women are saving less for retirement than men, and it’s a significant problem.

Why Women Are Saving Less

women are saving less

There isn’t just 1 reason women are saving less.

First, women continue to be paid significantly less than men.

Second, women tend to take off work for caregiving, which means they have fewer years to contribute to a 401(k).

Third, women received a different financial education than their male counterparts.

For instance, the Equal Credit Opportunity Act was not passed until 1974, when women were allowed to get a credit card in their own name.

As a result, women were not managing their finances as men did.

Rita Soledad Fernández Paulino, personal finance coach and founder of Wealth Para Todos tells CNET, “We have a whole generation of women whose mothers weren’t necessarily engaging in debt management.”¹⁰

The Retirement Savings Gap

women are saving less

Women are facing a retirement crisis.

This is even more apparent when considering Americans in general are experiencing a retirement savings gap.

The retirement savings gap refers to what people are saving versus what they actually need.

Unfortunately, Americans need significantly more money during their retirement savings than they are actually saving.

Experts today believe retirees need approximately 1 million dollars (1.46 million) to retire comfortably.¹¹

However, a 2024 Vanguard report found, “The average balance in employer-sponsored retirement contribution plans rose to $134,128 in 2023. […] The median account balance was $35,286.”¹²

That’s a long way from a million-dollar nest egg.

Now, factor in the fact that women have even less in their retirement accounts, and it is abundantly clear that women are facing a retirement crisis.

Another primary consideration is that women outlive men, on average.

This means the retirement savings gap is even more significant for women.

According to CNBC, “In developed societies like the United States, women are expected to live for 79 years while men are expected to live around 72 years. This seven-year difference means women need to save a little more money than men to fund the last chapter of their golden years. Even for someone who spends a modest $40,000 a year in retirement, this amounts to an additional $280,000 to cover those final seven years.”¹³

Reclaim Retirement Planning for Yourself

women are saving less

Whether you are a woman (or a man hoping to pass along essential information to the women in your life), you’ve come to the right place.

Women can boost their retirement savings and get to a place where they feel more financially secure for their future.

Familiarize Yourself: You can start to reclaim retirement planning by familiarizing yourself with your 401(k) plan. Unfortunately, many women place retirement planning solely in their spouse’s hands. This is a mistake. Take an active role in planning for your future – especially considering you may outlive your spouse.

Educate Yourself: If you need to be more knowledgeable about finances, saving, and investing, give yourself permission to learn. Read financial blogs, listen to financial podcasts, and read books on retirement savings.

Review Your Plan’s Rules: If you are in a relationship, you must ensure you and your partner participate in the best 401(k) plan and take advantage of company matching contributions. Read The 401(k) Mistake Married Couples Make to learn more.

Start Saving More Now: Don’t put off saving for retirement. Start saving now and give your savings time to grow. Make it a goal to save enough to get the employer match.

Speak with a Professional: If you have questions, ask the experts. If you want advice, ask the experts. Closing the savings gap for women may come down to simply seeking help from a professional.

Have questions or concerns about your 401(k) performance? Book a complimentary 15-minute 401(k) strategy session with one of our advisors.

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