Women are more likely than men to participate in their company's retirement savings plan and to save at a higher rate? Why do their retirement savings lag behind men's?
Women may be better savers than men with it comes to retirement, but is that enough?
A new Vanguard research report finds that women are 10 percent more likely to enroll in their workplace savings plans than men, and that once enrolled, women across all income levels save at rates anywhere from 6 percent to 12 percent higher than their male cohorts. Women are also more likely than men to turn their portfolio construction task over to an investment professional.
But despite being diligent and conscientious savers, their retirement savings are still lagging far behind those of men, according to Vanguard senior research analyst Jean Young.
According to the Vanguard analysis of more than 1 million 401(k) retirement plan participants, women have an average balance of $78,000, while the average retirement plan balance for men is $120,000.
Such findings tap into women’s greatest concerns about their financial futures. Running out of money in retirement is the biggest financial fear of women, according to Spectrem’s Millionaire Corner research. Similarly, not accruing enough retirement savings is their biggest financial regret. Nearly six-in-ten (59 percent) of female investors with a net worth of at least $100,000 express concern about being able to retire when they want to, compared with 44 percent of their male counterparts.
Why the retirement savings disparity? Women, Young points out, have two big strikes against them. The first is salary inequality; Overall, male respondents to the Vanguard survey earned an average of 40 percent more than women, with men’s wages averaging $107,000 and women $77,000. “Put simply, wages help determine how much people save,” Young writes in her blog.
Another factor in the retirement savings gap is career longevity. According to the AARP Public Policy Institute, women work 12 fewer years over the course of their careers than men due to taking time off to raise families or act as caregiver for a spouse or aging parents.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.