Invest Retirement

Does Gender Impact Retirement Savings?

Jen Turrell  |  April 19, 2023

A look at what women face when saving for retirement. (Yes, gender plays a role in how we invest, but women can strategize and find success!)

It’s not always something you consider in the earlier years of your career, but establishing and growing your retirement savings is something you should prioritize from your very first day in the workforce. Unfortunately, many Americans —  women in particular — simply aren’t saving enough for retirement. According to a recent study by T. Rowe Price, women contribute less to their workplace retirement accounts and have significantly lower retirement account balances than men. The study showed that the median 401(k) account balance for women was 65% lower than those of men, and that overall women contributed 43% less to their retirement accounts when compared to men.

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But what, exactly, do the numbers look like once women hit retirement? A 2022 study by Fidelity Investments found that the average 401(k) balance for women was $87,500, while the average balance for men was $164,500. In other words, women have about 57% of the average 401(k) balance of men. (If you’re keeping score, this means that the retirement savings gap is far worse than the gender wage gap, which means that women, on average, earn 82 cents on every dollar that men earn.)

Why Do Women Save Less?

For starters, we earn less. And that’s big. But there’s also the fact that we’re more likely to leave the workforce than men, typically to care for a sick family member or to care for a child. A 2022 study by the Pew Research Center showed that 52% of women had taken time off work in the past year for a personal or family reason, compared to just 39% of men. (And time out of the workforce means reduced earnings in the here and now, plus reduced retirement savings in the future.)

There’s also a negotiation gap for women, which means we’re less likely to ask for more money when we need it — but asking for a raise is one of the best ways to make sure we’re being paid what we deserve. A 2022 study by the National Bureau of Economic Research found women are only 68% as likely as men to negotiate for a raise, and when we do, we’re only 51% as likely to be successful. Part of the reason for this is we’re just not as confident as men when we head to the negotiation table, but for good reason. Statistically, we’re more likely to be penalized for negotiating.

Also, women often face a heavier student debt burden that can prevent us from saving and investing once we start our careers. A 2022 study by the Brookings Institute found that women hold more student loan debt than men, and we also tend to have higher interest rates on our loans. On average, women hold $31,276 in student loan debt, while men hold $29,790. Women also tend to have higher interest rates on their loans, at an average of 5.8% compared to 5.3% for men.

There are also countless situations outside of our control that can act as earnings roadblocks during our working years. Whether it’s a difficult pregnancy or caring for a family member who suddenly needs help, any type of personal crisis can end up negatively impacting our financial future, or postponing the possibility of promotions and retirement savings. 

How To Prioritize Saving for Retirement And Change The Narrative

What can we do improve women’s retirement savings? There are several important steps forward we can take today. We can: 

Negotiate, negotiate, negotiate. A higher salary equals more money to save for retirement. Women should negotiate whenever we start a new job, or whenever it’s time for our annual (or bi-annual) review. Here’s a look at the rules of negotiation for 2023. You got this.

Start saving early and often. The earlier you start saving for retirement, the more time your money has to grow. If your employer offers a 401(k) plan, start contributing as soon as you can, as much as you can. Even if you can only afford to contribute a small amount each month, it will add up over time. And if your employer offers a match, turning it down is like leaving free money on the table — no way! 

Get financial advice when you need it: It’s okay if you have financial anxieties or uncertainties in your life. We all do! The key is getting help when you need it. HerMoney’s FinanceFixx financial coaching program helps you see exactly where your money every month so you can figure out how to prioritize saving for retirement, a house, a car, or any of your other big life goals. Our 8-week course (where you’ll be paired with an incredible financial coach and plenty of encouragement) has been proven to help people save more + stress less. We call that a win-win. 

Seek out employers that offer benefits and flexible work arrangements. There are some employers that make life easy for working moms and those of us who enjoy a healthy balance with work life and family life… and then there are some that don’t. If you’re not being offered retirement benefits, paid sick leave, paid family leave, telecommuting or flextime, it’s time to find it.

Don’t be afraid ask for exactly what you want. Not only does this work at the negotiation table, it works in all areas of life. What you earn today directly impacts what you’re able to save and invest for your future, so you should never settle for less than what you know to be fair. Before you start your job search, do your research. There are countless resources for finding out the standard pay for your industry and location, like PayscaleAnd be prepared to walk away if you don’t find what you want. Because it’s out there, we promise!

Know your worth. If you’re a self-employed woman — a freelancer, a small business owner, or an entrepreneur — raise your prices. Research your competitors and their salaries so that you can confidently charge more. 

Invest more. The National Bureau of Economic Research recently found that women are less likely to invest in stocks than men. The 2022 study found that just 35% of women own stocks, compared to 55% of men, and the study pointed to the fact that women are more likely to be risk-averse than men. But here’s the thing: when women do invest, we perform better than men. That’s right, we’re intimidated by something we’re actually quite good at… And it’s past time we embraced our well-deserved confidence in the investing arena! One of the best ways to do that is by getting educated on all things Wall Street via HerMoney’s InvestingFixx investing club for women, run by CNBC’s Karen Finerman and HerMoney CEO Jean Chatzky. These two savvy investors will teach you stock market lingo, how trade via your very own brokerage account and so much more.


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