When I first started the 401 (k) business and heard that someone had expressed the need for a special seminar on women and investment, I was surprised. Why do we need to talk about saving and investing separately for women than for men? As soon as I learned: the need to save for retirement is even more urgent for women because they face some undeniable headwinds.
Gender pay gapD
For starters, most people are well aware of the gender pay gap, which currently earns women only 82 cents per male dollar. To put it mildly, the improvement in this number has been slow over the years and at the current rate of progress, it is assumed that gender pay inequality will not stop until 2093. The older the woman, the bigger the gap. A lower career income means that women are less likely to save for retirement.
Long life expectancy.
In addition, the average life expectancy of women is about 81 years compared to 76 years for men.2 It is another five years that women have to support themselves in old age when the regular salary-allowance no longer comes. And it’s just based on the average one-third of 655-year-old women today who are in excellent health and will probably live to the age of five, the last three decades of traditional retirement age.3 So the money that women have saved for retirement needs to be further expanded, in some cases much more. In some cases, it forces older women to return to work, often in low-paying jobs.
Spend less time at work.
Compared to men, women often have a lower consistent income stream over their working years. As primary caregivers in most families, women are more likely to spend years of their care preventing them from caring for loved ones – children, parents or anyone else. Or they may choose to take a part-time job that not only reduces their income but also often gives them access to benefits, including their retirement plans.
Participation in workplace savings plans is low.
Women (and especially women of color) are more likely to work part-time or in other positions that do not include retirement benefits.4 Even when they have access to a workplace retirement savings program, women are less likely to take full advantage of it. As part of a recent study on the attitude and behavior of retirement conservation between the millennium and General Z, Betterment found that, overall, men are more involved than men in terms of retirement savings.5 Especially in the case of workplace retirement plans like 401k:
- Almost twice as many women are not contributing to retirement planning.
- Significantly more men among those contributing have increased their contributions in the past year – so they are going to their account.
- More male employers are making the most of the match. This means that women who have matches are leaving money on the table.
Low participation of women in workplace savings plans
What a great. That’s a lot of dizziness! And that was even Before Epidemic hit.
As a result of Covid-1 of, women are more likely to leave their paid positions to care for school-age children than their male counterparts, which means they are losing the workplace in terms of gender diversity.6 But the risks for women are even more personal: leaving the workforce means not only related to career advancement, but also related to financial security and building savings. And again, women of color are unequally affected: the epidemic affects many industries where they are widely represented, even when Hispanic and black women are more likely to be the sole head of the family and the main source of financial support for their families.7
For all these reasons, women should start saving for their future – regardless of their age – before it is too late. The younger generation can learn from older women: In one study, 41% of women of all races and ethnicities said their biggest financial regret was not trying to invest more.8 Other studies have found that women are 14% more likely to experience financial stress than men and 13% less optimistic about their financial future.9
Women of all ages need to understand these challenges that may not affect them now, but will probably in the future. And if they have already saved, they (and everyone else!) Should be helped to spread the word.
It’s not too early to start saving for retirement. And can help improve. Whether you have a 401 (k), IRA, or other account with us, we can help you create a plan and determine how much to save, how to invest, and which account to use. And our automated tools and techniques will help keep you on track.