Retirement Benefits

Most Women Save Less for Retirement Than Men

Close-Up Of Human Hand Against Blue Background

Discover the reasons most women earn and save less than men and the steps women can take to ensure financial independence in retirement.

There is a gender gap in retirement savings. Over their lifetime, on average, women earn less money than men and live longer. As a result, they have an increased risk of outliving their retirement savings.

Women Earn and Save Less Than Men

On average, women earn $0.82 for every dollar (PDF) a man earns.

During their career-building years, women cite family and home responsibilities (PDF) such as caregiving as the most common reason for not working. As a result, they work fewer hours or accept a job that offers more flexibility but lower pay, reducing their yearly earnings.

“The lifetime earnings of mothers with one child are 28% less than the earnings of childless women, all else equal, and each additional child lowers lifetime earnings by another 3%,” according to The Center for Retirement Research at Boston College.

Time away from the workforce can also lessen women’s opportunities for building new skills and networking, further impacting their career advancement and widening the gender pay gap.

Additionally, members of the “Sandwich Generation,” adults in their 40s and 50s who have children and aging parents, often provide financial and emotional support to their loved ones. According to a study by AARP, 58% of women serve as a caregiver for elderly parents or a spouse, taking time away from paid work to carry out unpaid caregiving duties. These duties further impact their Social Security and retirement savings.

Women Depend More on Social Security

Social Security Benefits (PDF), which women strongly rely on in retirement, are calculated based on average indexed monthly earnings during the 35 years in which a person earned the most. Therefore, time spent out of the workforce reduces the benefits a woman can expect later in life. Being married or widowed can increase a woman’s benefit depending on how much her partner earned compared to her.

If a woman is divorced, the situation is a bit more complicated (PDF) based on how long she and her partner were married, how long they have been divorced, and if she remarried.

Women who never married or were married fewer than 10 years will not be able to rely on collecting spousal benefits and are more likely to live in poverty (PDF), even with Social Security benefits, when they are 65 or older.

Women Report Lower Financial Literacy

Regardless of age, relationship status, or education level, women report (PDF) lower levels of financial literacy than men. They feel confident they can make daily money decisions, but that confidence decreases when it comes to long-term investing, including funding retirement. Women typically live longer than men, giving even greater urgency to the total investments and savings they accrue over a lifetime.

How We Can Improve

Issues like the gender-based wage gap, family leave and childcare, caregiving and domestic labor, and basic financial literacy education require collective effort to effect change. However, for changes women can make today, try the following:

  • Take a course in money management or investing. Community colleges, universities, adult education centers, libraries, credit unions, financial service companies, and government websites offer financial education classes for adults.
  • Speak with a financial advisor. Ask your friends or colleagues for recommendations. Make sure the advisor is a fiduciary, meaning they are legally bound to act in your best interest. Talk with them about your financial goals and set up steps to achieve them.
  • Create a financial plan. Figure out a plan that works for you, that is achievable, and gives you the freedom to enjoy life today as well as prepare for the future. Check out our Planning Your Financial Future Checklist to help you get started.
  • Supplement your retirement. Look into saving money through deferred compensation and other savings vehicles.
  • Seek support. Find out if you have family or friends who are willing to share childcare duties. Seek programs in your area that assist with elder care.
  • Find a mentor or sponsor. A mentor provides you with the knowledge of their experience to guide you in your career. A sponsor actively promotes your skills and advocates for you, even when you are not in the room. Both can help advance your career.
  • Ask for a raise, if possible. Gather the information you need for the negotiation process through online job sites. Transparency is gaining traction as more people share their salaries online.
  • Pay it forward. If you have children, ensure they are financially literate and know how to balance a budget and establish a savings plan.

The gap in women’s retirement savings will not close overnight. Considerable systemic barriers still exist, despite efforts to correct the issues. In the meantime, women can help ensure their own financial success so they can achieve the retirement peace of mind they deserve.