Why Women Have Less Money Saved for Retirement than Men

There are differences between men and women, but having enough money to retire comfortably shouldn’t be one of them.

There’s a major gap in retirement funds between genders: Women have less than a third the median savings of men across all age groups, according to a Prudential survey in June. Unfortunately, that gap is not an anomaly but the result of other financial shortcomings. Even as women achieve higher levels of education and take on more leadership roles in organizations, they still face obstacles in areas like pay and financial literacy.

“When I’ve worked with couples, they often decide that only one of them will set aside funds for retirement, and often, the woman, or one of the women, will forego retirement savings,” Prudential financial planner Stephanie Sherman said, adding that the extra money supplements family-related expenses or caring for aging parents.

Claiming Inheritance

The great $84 trillion wealth transfer — when the Silent Generation and Baby Boomers pass savings and assets on to their children — is already underway, and over the next few years, women stand to inherit $9 trillion. But can that bridge the wealth gap? Not entirely.

“Despite this tsunami of wealth transfer, I believe a ‘confidence gap’ will still exist for women,” Allison Alexander, an advisor at Savant Wealth Management, told The Daily Upside. “It’s important to start at the beginning and help develop holistic financial plans that integrate their investment management with their tax and estate planning.” 

Mind the Gap: On average, US women are paid 84% of what men make, according to the Department of Labor, so by default there’s less money to be saved. With that income hurdle in mind, studies have found that women have more skepticism for investing, too. Even for women who have solid financial literacy and income, retirement planning is complicated:

• Women often take on the role of primary caregiver to children and aging parents, and they’re nearly three times as likely to delay retirement due to that compared to men, the study found.
• Women also tend to outlive men, which sounds good on paper, but means their savings have to last longer. Many continue to work in some capacity after retirement.

Barbara Pierce, founder of Women With Capital, told The Daily Upside that divorce is another major factor in women having less money in retirement. She added that divorce can be a “powerful impetus to work on gaining confidence in investing.”