By Gabrielle Olya
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40% of Women Have Less Than $10,000 Saved for Retirement
There are numerous reasons why women tend to have less saved for retirement, one of which is that women often have career gaps — time when they lose access to workplace retirement plans and are likely not actively saving for retirement.
“Women often leave the workforce to care for children or even elderly parents,” said Michelle Patello, wealth management advisor at TIAA in Fort Collins, Colorado. “This break in employment often prevents them from saving consistently throughout their careers, and much of their lost earnings and savings will never be recovered.”
Another barrier is a lack of financial education.
“Financial literacy and planning lead to financial confidence, and traditionally, women have not been exposed to financial education in the same way as their male counterparts,” said Neha Mirchandani of BrightPlan, a financial wellness company. “In fact, our early experiences with money set the tone and act as a powerful force throughout our financial lives. It’s often called our ‘money story’ or ‘money script,’ which is the impact of our childhood on how we feel about money and how we interact with it and manage it throughout our lives. If women don’t have a powerful childhood ‘money story,’ it can bleed into adulthood.”
12% of Women Believe They Can Never Afford To Retire
With most women having little to nothing saved for retirement, it’s not too surprising that over 1 in 10 women believe they will never be able to retire. The percentage of women who believe they can never afford to retire is double the percentage of men who believe the same (12% versus 6%).
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While this percentage may be based in reality, there may also be a psychological aspect to this feeling.
“Women are, on average, less confident than men about managing their money,” Mirchandani said.
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31% of Women Haven’t Started Saving for Retirement
TIAA’s Patello emphasizes the importance for women to “start saving for retirement ASAP. Automatically deduct money from your paychecks and use it to build your retirement savings. This allows the money to compound.”
The easiest way to get started is to contribute to your employer-sponsored retirement plan if you have access to one.
“Women should save at least what their employers will match, which is often 3% to 5%,” Patello said. “If a woman makes $55,000 a year and saves 3% of that salary, their companies could match that 3%. That’s $1,650 from you and another $1,650 from them. If you don’t save that full 3%, you’re leaving free money on the table.”
23% of Women Can’t Budget Any of Their Salary for Retirement
“It makes sense that women have less retirement savings than men because traditionally, women have been paid less than men,” said Shelly-Ann Eweka, CFP, ChFC, senior director of advice strategy at TIAA. “It’s 82 cents on the dollar for all women — Black women earn 63 cents on a dollar and Latina women earn 53 cents. Those stats are staggering.”
With rising costs and stagnant wages, it is getting even more challenging for women to set aside funds for long-term savings.
“You don’t have a retirement account if you’re struggling to pay your monthly bills,” Eweka said. “It’s a direct correlation. If you can’t keep up with monthly bills, saving for retirement is a luxury.”
