Why Women Need to Save More Than Men

Women earn 77 cents on the dollar compared with men, and they’re less likely to be covered by company retirement and pension plans. Combine that with the fact that women tend to live longer, and it’s clear why they need to save conscientiously for retirement. Here’s how to jump-start your retirement planning.

When it comes to retirement savings, women continue to lag behind men. “They’ll spend enormous time and energy taking care of everyone else, then neglect themselves,” notes Cindy Hounsell, president of the nonprofit Women’s Institute for a Secure Retirement. “It’s such a common situation.”

Women had an average of $50,100 in their 401(k) accounts compared with more than $89,698 for men, in a 2009 study of nearly two million participants in large-company 401(k) plans.

What’s more, women seem to know, intuitively, that they’re at a disadvantage. Only 25 percent of women are confident they’ll have enough money to cover basic living expenses in retirement, according to recent data from the Employment Benefit Research Institute.
Women think of money as a family affair, to help the whole family, not as satisfying their needs.
Savings handicap

What makes it harder for women? For starters, women live longer than men — about five years longer, according to the National Center for Health Statistics. And that means we need more money to see us through. Women also have a savings handicap for the following reasons:

  • We earn less than men. While some reports suggest the pay gap is narrowing, the Census Bureau said in September that full-time women employees still make, on average, only 77 cents for every dollar earned by men.

  • We tend to spend less time on the job, because of care-taking responsibilities for children and elderly parents (or both), and we are more likely than men to work part-time.

  • Because of the part-time work and/or fewer years in the work force, we are less likely to be covered by company retirement or pension plans.


Women who have joined a retirement plan at work tend to save more than men at the same income levels. But in the life-isn’t-fair department, women in general still end up with less because of their shorter job tenures and incomes that are on average lower than men’s.

Family needs versus personal ones

Then there are the personal issues. “The main difference I’ve found between men and women is that women think of money as a family affair,” notes Ginita Wall, a CPA and author of It’s More Than Money, It’s Your Life. “They think it’s there to help the entire family, and don’t think of it as satisfying their needs.”

Wall tells of one woman who saved consistently throughout her career and was in good shape to retire at 60. But the desire to help an adult daughter with the legal costs of a child-custody battle vastly depleted her retirement funds. The woman, a therapist, worked well into her 70s trying to catch up.

“It’s hard to say no when you feel your children or grandchildren are in jeopardy,” Wall says. “But in a perfect world, you’d brainstorm other ways to help.”
Salary is not the critical factor

Even women with CEO salaries may flounder when it comes to their own long-term financial planning. Mary Dunk Christensen, a financial educator who lectures frequently on women and financial independence, tells of a middle-aged woman making more than $400,000 a year. “She’s at the top of her game in her career, yet she does not have enough resources to become financially independent,” Christensen says. “Many women prefer to help others first. I’m not sure that men in general are pulled in so many directions with their money.”

Ultimately, it’s your savings discipline, not your salary, that makes the difference. “Six-figure salaries can dwindle just like $20,000 salaries,” Hounsell notes. “In fact, with high salaries, women usually have a lot going on that takes up income: high costs for child care, for example, and the maintenance of a certain kind of lifestyle. For professional women, a six-figure salary doesn’t guarantee them anything.”

The urgent message is that women need to try harder to prepare for retirement — by saving early and consistently, and by making saving as much a priority as paying the mortgage or the utility bill.
What’s your retirement number?

To jump-start your retirement planning, Hounsell suggests you figure out your own “retirement number” — the amount of money you’ll need to support yourself in retirement. You can get a rough estimate by looking at your W2 and subtracting Social Security and taxes from your earnings; what’s left is your disposable income. Multiply that figure by the number of years you expect to be living in retirement.

A retirement savings calculator can help, such as Wells Fargo’s My Retirement Plan SM or the American Savings Education Council’s Ballpark Estimates.

Key Points:

  • Women tend to save less for retirement than men.
  • Women tend to live longer than men and earn less money, making it even more important for them to save.
  • Women also spend more money on family members, instead of socking away savings for retirement.

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