Women Have 30 Percent Less Savings Than Men When They Retire. Here’s How to Change That

How do you feel about your retirement plan? If you’re worried, frustrated or confused, you’re not alone. A recent survey of 1,586 women conducted by Teachers Insurance and Annuity Association of America (TIAA) in partnership with YouGov, an international research organization and Emily Oster, an economist and author, found only 26 percent of respondents feel good about their retirement savings. Women, especially mothers, tend to prioritize family spending ahead of their own financial well-being. TIAA, YouGov and Oster are on a mission to help women and moms retire better—and we’re here for it.

Meet the Experts

3 Questions About Retirement You Should Be Able to Answer by Age 50

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What Does the Data Say?

Oster, whose data-driven books like Expecting Better and Cribsheet help parents make informed decisions, was surprised by the numbers collected by TIAA and YouGov. She hadn’t anticipated how many women don’t feel in control of their retirement. Almost half (47 percent) said they had no retirement savings. Twenty-seven percent reported some savings, but weren’t happy with how much they’d managed to put away. “Many people feel like, ‘No one told me about this,’” Oster says. “Even people on the [research] team said they didn't really feel prepared.”

Education level is the biggest indicator of how much a woman has saved for retirement. Compared to 72 percent of women with postgraduate degrees who have retirement savings, only 39 percent of women with high school degrees have funds saved. Age, race and whether or not the respondent had children had less of an impact on how much was saved. 

As readers of Oster’s ParentData newsletter know, it’s always important to look at where the data came from. In this instance, YouGov was able to reach a large, random sample that included women from various education and income levels. 

Why Do Women Have Less Retirement Savings Than Men?

On average, women in the U.S. live five years longer than men, but men have 30 percent more in savings when they retire. This gender savings gap can be attributed in part to short-term thinking and a lack of financial resources.

It’s easy to think in the short term when it comes to family planning. Kids are a handful and parents are in survival mode those first few years. Plus, only 32 percent of respondents said their employers offer paid maternity leave. This means women will dip into savings or take funds from their 401ks to stay afloat while on maternity leave. Not ideal. When deciding whether or not to stay home with children after leave, half of respondents considered what life would be like without their income. Only 33 percent thought about the impact their decision would have later, on retirement.

Childcare costs are usually the focus when deciding next moves after maternity leave, so it’s no surprise that 54 percent of working mothers said they would turn down a better paying job if it also meant higher child care costs. The problem is, this means missing out on significant retirement savings in the long term.

The example given by TIAA is a woman making $60,000 a year who saves 3 percent ($1,800) annually for retirement. Putting a pause on work and savings for just two years will cost her $38,000 in retirement savings by the time she is 65 (assuming a 7 percent interest rate). 

Melody Evans, a wealth management advisor at TIAA, encourages women to think about the broader picture. “Avoid tunnel vision between birth and school age,” Evans says, noting that even if all of your income goes to childcare, if your employer matches retirement contributions, you’re still saving money. (Not all employers do this—more on that below.)

No one is saying all mothers have to work or must go back to work after having kids—that’s your decision! But, as Evans points out, “Even if you leave [the workforce], you have to plan.” This data is meant to educate women so they can make informed decisions, which brings us to the next reason men retire with more: financial resources.

Nearly a third of respondents said they never learned about retirement savings. Their parents, schools and employers failed them. Only half said they had a grasp on how motherhood would impact their financial situation.  

Evans advises starting with “a budget and frank conversation about expenses” with your partner (or yourself if you’re single). Include retirement in that conversation. She also recommends annual financial wellness checks. Ask your employer what they recommend if they don’t offer a 401k plan. Talk to a financial planner to gauge your best options.

How Much Should I Be Saving for Retirement?

While we can’t tell you exactly how much you should save, we can equip you with information to help you figure it out. TIAA developed a retirement calculator so you can see how much you’ll have annually once you retire.

To use it, you’ll need your salary, your current retirement savings and the percentage of your paycheck that currently goes toward retirement. If you’re not sure what percentage you put away, divide the amount you save each year by your annual salary.

In the survey, 49 percent of women who either didn’t have any savings or weren’t happy with their savings said that after paying bills and rent, they had no income left to put towards retirement. Oster emphasizes that even small amounts can add up over time.  

Consider this: If you saved $5 per month between ages 30 and 65, you’d have $10,000 in retirement savings. Bump that up to $100 per month, and you’d have $160,000. Anywhere in between can yield significant numbers.

Should I Have My Own Retirement Account or a Joint One with My Partner?

“I really like the idea of people having their own retirement accounts,” Evans says. You can choose your beneficiaries and decide how risky you want your investments to be. Oster also touts the importance of financial independence. She notes that there’s still an aura of frivolity surrounding women’s incomes, as though their earnings are meant for household expenses and childcare only. Opening individual retirement accounts empowers women to make decisions for their future selves.

If your employer offers a retirement plan and matches contributions, absolutely take advantage of it. As life circumstances change, you can increase or decrease how much you contribute with each paycheck.

What If My Employer Doesn’t Offer a Retirement Plan?

Both Oster and Evans say there’s no need to panic if your employer doesn’t offer 401k or retirement matching plans. Anyone over 18 with an income can open a traditional IRA (Roth IRAs are also an option, but they have income limits). With a traditional IRA, you contribute what you can. Ideally, you would contribute $6,500 each year, the maximum amount allowed. But again, even $5 per month (or $60 annually) can add up over time.

If your employer does offer retirement plans and you’re already maxing out your contributions, Evans recommends opening an investment account to save more.

What If I Haven’t Started Saving for Retirement Yet?

This conversation is not meant to shame anyone for their lack of retirement funds—quite the opposite. Oster wants women to learn about the options available to them. “The more transparency, the more possibilities,” she says, adding, “Good decision making is about looking forward.”

Retirement planning can also be a less taboo way of discussing financial wellness with other women. In the U.S., where the average woman earns roughly $.82, Black women earn about $.63 and Hispanic or Latina women earn $.58 for every dollar a man earns, transparency among women and their colleagues about salary can help close the gender wage gap.

“Knowledge is power,” Evans says. “Use that calculator.”

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Sarah Ashley is a Chicago-based freelance journalist. She has covered pets for PureWow for six years and tackles everything from dog training tips to the best litter boxes. Her...