Source: Social Security Administration.
The gender pay gap has garnered all sorts of media and
legislative attention, prompting marches, committee hearings, and
petitions to Washington. There is even an Equal Pay Day to mark
how far into the new year females must work to earn as much as
men did the previous year (it was April 8 this year).
While the gender pay gap is a real phenomenon, it has
overshadowed another inequality that has the same potential to
threaten the long-term financial stability of women: the glaring
gender gap in retirement savings.
A 2013 report from the Employee Benefit Research Institute,
based on 2011 numbers, found that IRAs owned by men had a median
balance of $31,944, while the median balance for women was
$21,642. For those aged 70 and older, median balances were
$72,971 for men and $42,926 for women.
While this gap is troubling on its face, financial advisors
say there are also several reasons why women need to save more
aggressively than their male counterparts. Here are five of
1. Women often have fewer years in the workforce
"Many women don't earn as much as men and often end up working
less because they take time off to have children at some point
during their careers," says financial planner and author Douglas
In fact, a 2013 Pew Research Center study found that 27% of
mothers say they have quit a job to care for a child or family
member, compared to 10% of fathers. In addition, 49% of mothers
have reduced their work hours to provide care, and 39% have taken
a significant amount of time off work. Meanwhile, only 28% and
24% of fathers said the same, respectively.
"Many women who take off time to be home with their kids don't
think long term and don't fund a private retirement account, such
as an IRA," says Goldstein. "This can be a big mistake later on,
as their contributions to Social Security are lower, and they may
not benefit from the more generous retirement plans offered by
2. Women may be more conservative in their
"Women have a tendency to be more conservative, sometimes to
their detriment," says Keith Klein, CFP and owner of Turning
Pointe Wealth Management.
While conservative investing can keep money safe, it may also
mean women don't earn high enough returns to build a comfortable
nest egg. However, it's not all bad news for women. Klein says
this conservative approach also means women tend to ask more
questions and stick with their investment decisions, which can be
a good thing in a tumultuous market environment.
"Once women make a decision, they stick with it," says Klein.
"They understand the ups and downs of the market and are less
likely to react emotionally."
3. Women don't necessarily plan for themselves
Whether they let a man make their investment decisions or assume
their husband's Social Security or pension will sustain them,
many women make the mistake of not taking charge of their own
"It surprises me that even today, after all of the changes in
traditional roles, the men still dominate the financial
decision-making in most couples I meet," says Goldstein.
Klein suggests that part of the problem may lie with advisors
who assume men are the decision makers. He says women shouldn't
be afraid to speak up during investment discussions and that
women are involved in more than 60% of the decisions made by his
"Women shouldn't feel like a burden asking questions," he
says. "If they do, they should look for a new advisor."
4. Women outlive men on average
Part of the reason women shouldn't leave all the decisions to the
men in their life is that those men may not be around as long as
them. Longevity doesn't necessarily contribute to the gender gap
in retirement savings, but it is one reason women should be
concerned about it.
"About 50 to 60% of women will be single (at some point) in
retirement," says Klein.
Those women might be divorced, widowed, or simply unmarried.
Regardless of the reason, they need to be prepared to take care
of themselves during their final years. Goldstein says women,
even divorced women, should check for the availability of
spouse's benefits from Social Security and pension plans.
However, that money will only go so far, and help may not be
available from other sources.
"In the past, the children and grandchildren looked after
Grandma, but today and also in the future, that's no longer
necessarily the case," says Goldstein.
5. Women may place others' needs ahead of their
It's unfortunate that children and grandchildren may not feel an
obligation to help their mothers and grandmothers because, in
some cases, those older women may lack retirement savings because
they prioritized their families above themselves. Children's
college funds often get money before retirement plans, and family
needs are placed before savings.
"Widows may be concerned about how much they will leave to
their children when the first thing they need to do is protect
themselves," says Klein.
Goldstein agrees. "A woman should always be financially
independent and aware, doing the best that she can to plan her
finances," he says.
If enough women take control of their retirement planning,
today's gender gap in retirement savings could become a thing of
This article originally appeared on
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When it comes to retirement, women may face some challenges
men will not.
5 Reasons Retirement Planning Is Tougher for
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