Retirement Savings by Gender

A wide savings gap exists between men and women

Reviewed by Ebony Howard

A gender gap persists in retirement savings. Women with caregiver roles often experience career gaps which means lower savings, lifetime wages, and Social Security. A 2024 survey by the National Council on Aging and Women’s Institute for a Secure Retirement revealed less than half of surveyed women over age 25 have retirement savings.

This gap may be traced to the gender pay gap. Women have historically earned less than men so women may need to work longer before they can retire.

Key Takeaways

• Women typically have less money saved for retirement than men.
• Due to caregiver roles, women may experience career gaps, meaning lower savings, lifetime wages, and Social Security.
• Improving access to financial education will help improve savings across genders.

Savings: Men vs. Women

In 2024, women surveyed by the National Council on Aging considered themselves less financially secure and unsure of how to plan and save for retirement than in 2023. According to Prudential, 55-year-olds surveyed in the United States hold less than $50K in median retirement savings in 2024 and 67% believe they will outlive their savings. Additionally, women have less than one-third of the median savings of men and are more likely to delay retirement due to caregiving duties.

With data compiled in late 2022, the Transamerica Center for Retirement Studies saw the following trends based on generation and gender:

Important

The Equal Pay Act of 1963 prohibited employers from paying different wages to men and women performing the same job.

Reduced Earnings

On average, women earn 84 cents for every dollar earned, a ratio that has remained unchanged for almost twenty years. This gap widens for women of color and women with disabilities, who earn even less compared to their male counterparts.

Lower earnings result in reduced savings for retirement. Women often experience employment breaks due to maternity leave or caring for family members, which affects their Social Security benefits and contributes to a smaller net worth. A woman’s net worth is an average of $5,541, significantly less than a man’s average net worth of $12,188.

In 2022, the average monthly Social Security benefit for retirees, disabled workers, and aged widows/widowers was approximately $1,788, totaling around $21,455 annually. Comparatively, in 2022, men received an average monthly Social Security payment of $1,838, while women received $1,484.

$45,300

Taking three months of parental leave can reduce lifetime Social Security retirement benefits by approximately 3 to 4 percent per leave. Leave-taking parents lose about $15,100 in lifetime retirement benefits for each three months of leave, equal to $45,300 for three children.

Reasons for a Savings Gap

• Women often prioritize different financial goals than men, such as emergency funds, debt repayment, and child support, impacting their capacity to save for retirement.
• Women’s access to employer-sponsored retirement plans is generally lower, especially for part-time workers, which disproportionately affects women. This leads to fewer women having the opportunity to contribute to 401(k)s or similar plans.
• Many women are forced to withdraw from their retirement savings prematurely. This reduces the potential for long-term growth of retirement funds.
• Women’s financial literacy trends are lower than men’s in the United States.

Narrowing the Gap

The sooner individuals focus on saving for retirement, the better. For women, the paid Family and Medical Leave Act (FMLA) at the federal level could effect change. While the FMLA offers 12 weeks of unpaid leave, only 13 states and Washington D.C. have enacted mandatory paid family leave systems.

The wage gap may need to be addressed with policy. Iceland serves as a prime example, having implemented a law that mandates companies with 25 or more employees to report that they provide equal pay for men and women. Failure to comply results in daily fines. In 2021, President Joe Biden outlined an ambitious plan to tackle financial disparities between men and women with the White House Council on Gender Equality.

March 12

Equal Pay Day, celebrated each March, highlights the ongoing issue of the gender wage gap. Introduced in 1996 by the National Committee on Pay Equity, it highlights how long into the new year women need to work to match the previous year’s earnings of men, spotlighting the disparity in wages.

How Long Will Retirement Savings Last?

How long retirement savings last depends on living expenses, retirement savings and income, and longevity. The 4% rule suggests that to have enough savings, retirees should plan to withdraw about 4% of their retirement savings annually, in addition to retirement income such as Social Security.

What Is the Average Retirement Savings?

According to Fidelity, the average IRA balance in 2023 was $109,600, an 8% increase from 2022. The average 401(k) balance decreased to $107,700. Fidelity also reports that the average 403(b) account balance was $97,200.

How Do Individuals Save for Retirement?

Individuals can save for retirement by contributing to a tax-advantaged retirement plan or account. If an employer offers a 401(k) plan, contributions can be automatically deducted from an employee’s paycheck. Otherwise, all individuals can contribute to a personal traditional IRA, Roth IRA, or both.

The Bottom Line

Women tend to earn less than men. Lower wages translate to lower net worth and savings, which impact how much money will be available in retirement. Closing the gender wage gap and implementing policy changes could help bolster retirement savings for all people in the U.S.