4 Reasons Why Women Have a Harder Time Saving for Retirement

When it comes to saving for retirement, women are struggling compared to men and they are less confident that they’ll live a comfortable lifestyle.

According to a study by the Transamerica Center for Retirement Studies, only 10% of women are very confident about retirement and around 64% of women don’t have a retirement backup plan.

There are myriad of reasons why women are having a hard time saving for retirement compared to their counterparts starting from gender pay gap to being the primary caregiver of children and older adults. Women clearly have a lot of hurdles to face compared to men when saving for their future.

Today, we’ll identify factors that make it hard for women to plan for retirement and how they can overcome these obstacles to have a retirement

Gender Pay Gap

Women are earning about 79 cents for every a dollar that a man makes.

credit: https://money.cnn.com/

Well, it’s time to change that.

A career-long pay-inequality is a big disadvantage for women when saving money for retirement. This is more than just about the amount of money women earn but its effect on their future considering that they outlive men for about five years.

This gender pay gap can hurt women in the future since they will end up paying more in health care costs in retirement compared to men. According to the recent study of Fidelity Investments, women will have to pay $14,000 more on health care costs than their counterparts.

But what’s more alarming is the fact that long-term care costs are not yet included in the said study, which is known to be costly. According to ALTCP cost of long-term care, the annual cost of long-term care facilities are as follows:

credit: www.altcp.org.


Women can attend salary negotiation workshops that can help them negotiate a pay raise with their current employer or at a new company. The American Association of University Women (AAUW) offers free salary negotiation workshops that aim to train around 10 million women by 2022.

The said salary workshop is starting to do wonders for women employees since half of the women who completed the workshop were able to negotiate a raise in their current job or receive a more competitive salary in a new company.

Unique Barriers for Women

Women are actually ahead of the gender curve than men when it comes to having stronger beliefs in the importance of planning for retirement and seeking professional help when saving for retirement. But do these beliefs translate to women taking the steps in securing retirement?

Unfortunately, no.

According to Michelle Brownstein senior vice president of the Private Client Group at Personal Capital, women face “unique barriers” – the culprit to savings shortage among women.

These so-called unique barriers are as follows:

• Around 27% of women are not offered an employer-sponsored retirement plan, whereas only 19% of men are not offered this type of plan.

• Only 58% of women offered with an employer-sponsored retirement plan contributions, while 67% of men contribute to this type of plan.

• 16% of women offered with an employer-sponsored retirement plan and contributed do not max it out unlike 26% of their male counterparts who max out their contributions.

• Amidst women’s shortcomings, 30% of women expect that their employer-sponsored retirement plan would be their primary source of income during retirement vs. 23% of men.


Look for jobs that offer employer-sponsored retirement plan. If you plan to move to another company, make sure that your new company offers the same retirement plan as your previous employer. Also, make sure that your company offers 401(k) matching.

Right now, the IRS states that you can put additional $6,000 in your 401(k) on top of the maximum $18,500 once you turn 50. Women should take advantage of the catch-up contribution so that they will have an additional $150,000 in their banks.

Caregiving Duties

Women are usually the ones who leave the workforce to take care of their children or their aging parents. Since women live longer than men, they end up taking care of their spouses until their final years.

It is not uncommon that women stop working to raise their children or take care of their loved ones. There are more women caregivers than male caregivers today.

credit: https://crhcf.org/

Taking some time off from the workforce has a negative effect on the retirement savings of women. In fact, a national study done by MetLife revealed the conflicting demands of caregiving and working and they are as follows:

• 33% of women who are working has decreased their work hours

• 29% passed up training, assignment or job promotion

• 22% took a leave of absence from work

• 20% became part-time employees

• 15% quit their jobs

• 13% retired early

Female caregivers are not just struggling with their careers but as well as in providing financially for the needs of their aging loved ones. A study was done by AARP found out that female caregivers spend around an average of $6,954 annually for expenses related to caregiving. This amount is approximately 20% of what they are earning. Due to their limited resources and hefty care expenses to cover, women are forced to look for other means of support.


More companies have adjusted their company policies and rules to accommodate employees who are also family caregivers. Thankfully, these companies are now more understanding of the present situation of female caregivers.

Right now, 53% of companies allow their employees to work flexible hours, 52% have sick days that are paid and 32% have family leaves that are paid.

To save more money in retirement, women should look for companies who have company policies that are more favorable to female caregivers. They can continue working and perform their caregiving duties without putting in jeopardy their opportunity to build wealth and retirement funds.

Since women are designated caregivers who would take care of them when they are old and they can no longer do their daily tasks?

Women have no choice but to build retirement funds or invest in a coverage that would pay for their long-term care needs.

Gender Investing Gap

Women don’t invest a much as men and they don’t invest as early as men too, resulting in women retiring only with two-thirds the money of men.

But when women invest, they are more risk-averse since they are less confident about investing compared to men. In addition to being a safe investor, women are not given the same amount of attention as men when it comes to selling investment products. They often miss out on valuable opportunities and investment advice that can help boost their portfolio.

The treatment women receive from financial planners, stock brokers and financial advisors are disheartening considering the academic studies were done by Betterment, that women “tend to behave in a way that better suits long-term investing.“

The nature of women is to keep a full 71% in cash while men hold only 60%. Having cash on hand may seem zero risks, but the purchasing power of your cash will decrease over time.

Since women are not into investing as much as men are, gender investing gap arises. Nearly half of women don’t even know that such a thing exists. And when asked how much a gender investing gap would cost them, their guess was around $113,000.

Their guess is nowhere near on the real cost of the investing gap, which can be as costly as $1 million over a 35-year career span.

credit: www.time.com


Closing the investing gap is possible and you can do it by finding an advisor that you think would help you grow your investments. Don’t settle on the first advisor you find. It pays to ask for recommendations from friends or work colleagues and to keep digging online.

To help you out, here are some characteristics of a good advisor:

• Keeps the costs low (below 1% for human service and o.5% or less for digital)
• Doesn’t hide fees
• Doesn’t go for the latest hot trends
• Personalizes and diversifies your portfolio to reach your goals

Being a safe investor is a wise move if you’re already nearing retirement. But if you’re young and your career is starting to get off, it pays to be more aggressive in investing since you will most likely retire with a massive nest egg in the future.

Make investing a habit. Doing it once your paycheck arrives is actually a good strategy because there are times you are buying high and there are times that you’ll be buying low. This can help reducing risk and can make it much easier for your portfolio to recover in case the market plunges.

The Bottom Line

Despite the fact that women are still underpaid even if it’s already 2018 and as a result, they would have fewer retirement savings, they should begin planning for retirement early and aggressively.

Women should study the challenges of retirement planning for women as well as the best solutions that can help them go through these hurdles and make it easier for hem to save for their golden years.