A recent survey highlights a troubling trend: American women feel less financially prepared for retirement compared to men, often struggling with lower savings, fewer investment choices, and limited access to employer-sponsored retirement plans. This gap leaves many women at risk of not having the financial stability they’ll need for a comfortable retirement.

Key Insights from Recent Surveys on Women and Retirement

Savings Lag:

• Over a quarter (26%) of working women contributed nothing to their retirement savings between 2023 and 2024. That’s 10% more than men.

• Nearly 6 in 10 working women feel they are behind on retirement savings.

1. Lack of Financial Security:

• More than half of American women aged 25 and older report they aren’t financially secure, with 77% of low-income women expressing the same.

• For many, the high costs of housing, inflation, and debt are major barriers to building up retirement savings.

2. Employer Retirement Plans Are Out of Reach for Many:

• Almost half of women don’t have access to an employer-sponsored retirement plan, leaving them without a major tool for long-term savings.

Why Are Women Saving Less?

The reasons women lag in retirement savings aren’t straightforward but stem from a few major factors:

• Gender Pay Gap: Earning less than men throughout their careers directly impacts women’s ability to save. Lower earnings often mean less disposable income and fewer savings contributions.

• Financial Confidence: Women often report feeling less knowledgeable about investments, which can deter them from making proactive financial decisions. Many women keep their savings in cash, missing out on potential investment gains.

• Life’s Other Expenses: High inflation, rising healthcare costs, and caregiving responsibilities often cut into available funds that could be going towards retirement.

Use a FREE retirement calculator to set your savings goal

Financial and Social Barriers Women Face

Beyond individual decisions, systemic issues also hinder women’s retirement savings:

• Job Market Challenges: Women often work in sectors that are less likely to offer retirement plans or stable job benefits.

• Caregiving Responsibilities: Many women reduce work hours or leave their jobs to care for family members, limiting retirement contributions and missing out on employer matches and other benefits.

• Longer Life Expectancy: Women live longer than men on average, meaning their retirement funds must stretch further.

How Much Do Women Need for Retirement?

Bankrate’s 2024 Retirement Savings Survey shows American workers estimate they need a median of $875,000 for a secure retirement. Over a third (35%) believe they’ll need more than $1 million. Millennials lead this view, with 40% thinking they’ll need over $1 million. By comparison, 31% of Gen Z, 37% of Gen X, and 22% of baby boomers share this target.

But there’s widespread uncertainty. About 27% of women don’t know how much they need, suggesting many lack planning support. This trend is also seen among 26% of baby boomers and 20% of Gen X, who are unsure about their retirement targets.

Without a clear savings goal, women risk missing out on the advantages of early investment. A lack of planning can limit their ability to prepare for long retirements and future healthcare costs, which are often higher for women.

Use a FREE retirement calculator to set your savings goal

Practical Steps Women Can Take to Boost Retirement Savings

1. Use Employer-Sponsored Plans if Available:

• If your employer offers a retirement plan, contribute enough to secure any available match. It’s essentially “free” money for your future. Many employers offer a 401(k) match, but you must contribute to get it.

2. Consider a Spousal IRA:

• For women who are out of the workforce or only working part-time, a Spousal IRA allows them to save for retirement using their spouse’s income. Contributions to these accounts still grow tax-deferred.

3. Start Small, But Start Early:

• Experts recommend setting aside a portion of each paycheck for retirement, even if it’s just a small amount. Compound interest grows your savings over time, and the earlier you start, the more time your money has to grow.

4. Build a Solid Financial Education:

• Many women avoid investing because of the perceived complexity. But taking an hour each week to learn basic financial concepts—like investment risk and portfolio diversification—can build confidence. Free resources from credible sites, like Bankrate or Fidelity, offer straightforward guides.

5. Develop a Long-Term Plan:

• Women, on average, face higher healthcare expenses in retirement, so factoring in these costs early on is essential. For example, spreading investments across stocks, bonds, and mutual funds can provide more stability and higher potential returns over time.

Address the Confidence Gap in Retirement Planning

While research shows women are cautious, thoughtful investors, many feel less confident about making financial decisions compared to men. This often results in them not investing at all. Financial advisors stress the importance of avoiding a "wait until it’s perfect" mentality—start with what you know and build from there.

By focusing on understanding risk tolerance, investment options, and savings goals, women can overcome this confidence gap. Organizations like WISER (Women’s Institute for a Secure Retirement) provide free or low-cost educational resources tailored to women’s financial challenges.

Policy Changes that Could Make a Difference

The NCOA and WISER surveys indicate strong bipartisan support among women for policies that address these financial security issues. Here are a few solutions that women overwhelmingly support:

• Raise Minimum Social Security Benefits: Increasing benefits above the poverty level could offer more security for low-income retirees.

• Provide Tax Breaks for Family Caregivers: With more women serving as primary caregivers, a tax break could ease the financial burden and allow for more retirement savings.

• New Government Retirement Options: Many women support a government-provided retirement plan that would allow workers without employer-sponsored plans to save tax-free for retirement.

• More Educational Programs: Free programs on retirement planning and Social Security benefits would help many women make better financial decisions.

Why It’s Essential to Start Now

Retirement savings aren’t just a future problem—they’re a present need. Every year that passes without contributions can add up to thousands lost in compound interest. If you’re behind, consider increasing your contribution percentage each year. Automating contributions can make the process easier.

Women in their 20s and 30s should particularly focus on building retirement savings now. The longer your money has to grow, the less you’ll need to contribute over time. For older women nearing retirement, it’s still important to increase savings where possible and avoid cashing out early.

Use a FREE retirement calculator to set your savings goal

Bottom Line

Retirement planning isn’t a one-size-fits-all approach. Women have unique financial needs that require tailored strategies and consistent effort. While financial insecurity among women remains high, proactive steps today can improve future retirement outcomes.

For those needing help, reach out to financial advisors specializing in retirement planning for women. These professionals understand the nuances and can provide targeted advice that aligns with your long-term goals.

Remember, the best investment you can make for tomorrow is starting today. Small steps in the right direction—like contributing to a retirement account, learning about investment options, and understanding your retirement needs—can add up over time. With the right resources, mindset, and support, a comfortable retirement is within reach.

Reference

Women's Institute for a Secure Retirement (WISER). (n.d.). Leaving a Job or Working Part-Time. Retrieved from https://wiserwomen.org/featured/leaving-a-job-or-working-part-time/

National Council on Aging (NCOA). (n.d.). Half of American Women Report Struggling Financially Today, Leaving Them Worried and Uncertain About Retirement. Retrieved from https://www.ncoa.org/article/half-of-american-women-report-struggling-financially-today-leaving-them-worried-and-uncertain-about-retirement/

Voice News. (2024, November 2). A Quarter of All Working Women Are Leaving Free Money on the Table That Could Set Back Their Retirement. Retrieved from https://www.voicenews.com/2024/11/02/a-quarter-of-all-working-women-are-leaving-free-money-on-the-table-that-could-set-back-their-retirement/amp/

Bankrate. (n.d.). Retirement Savings Survey. Retrieved from https://www.bankrate.com/retirement/retirement-savings-survey/?mf_ct_campaign=tribune-synd-feed&utm_content=syndication

Bankrate. (n.d.). Gender Pay Gap Statistics. Retrieved from https://www.bankrate.com/banking/gender-pay-gap-statistics/?mf_ct_campaign=tribune-synd-feed&utm_content=syndication#industries-with-the-widest-gender-pay-gaps