The Retirement Savings Gap Between Men And Women Is Bigger Than You Think

It's well documented that gender affects finances, with women earning about 12% less than men in their thirties and also receiving smaller social security checks in retirement. But another area where women also see financial discrepancies is in retirement savings. According to a study from the Alliance for Lifetime Income, women in the baby boomer generation have 30% less saved for retirement than their male counterparts.

The study looked at how prepared baby boomers — individuals born between 1946 and 1964 — are for retirement. It found that their median retirement savings is $225,000; however, the median for women is $185,000. Men, on the other hand, have a median retirement savings of $269,000. While it is still a considerable amount saved, it may fall short of the $410,000 net worth recommended for a comfortable retirement, further pointing to the fact that baby boomers will outlive their retirement savings. The gender savings gap also highlights how other financial discrepancies, including the gender pay gap and caregiving responsibilities can have a downstream effect on individuals.

Historically, women have been less confident about investing compared to men. A 2021 study from the National Bureau of Economic Research found that women often feel like they lack financial knowledge, which causes them to not invest or delay starting. Additionally, they are more risk-averse, and may never start investing or pick safer investments with lower returns. However, with retirement savings, socioeconomic factors also play a role. For example, the gender pay gap means that women will make less over their lifetime, and often end up contributing less to their work-sponsored retirement plans, which leads to smaller balances at retirement.

Caregiving, which predominantly falls on women, further limits how much they are able to save for retirement. Caregiving, which is often unpaid, involves taking care of another person such as a newborn or caring for a parent. When women take on caregiving responsibilities, they may be forced to reduce their work hours or stop working entirely, cutting their income stream and ability to save for retirement. But according to Investopedia, caregiving can also have downstream effects once they return to the workforce. Extended leaves can delay future promotions and wage increases, resulting in lower retirement contributions. Ultimately, the retirement savings gap between men and women can be seen as a continuation of disadvantages women face in the workforce.