Women Usually Save 44% Less Than Men by the Time They Retire; How Can They Save More?

Maintaining financial security requires saving a significant amount of money. However, it's crucial to remember that women typically earn less than men and have fewer opportunities to save money for retirement. In addition, women usually outlive men. There hasn't been much of a shift in the gender wage gap in the last 20 years. According to the Pew Research Center, women made roughly 80% of what men did in 2002, but by 2022, that percentage had changed to only 82%. Women face difficulties in saving money for many reasons, most of which are components of larger, more complex problems.

Why do women earn less than men? 

The New York Life 2023 Wealth Watch poll found that women saved an average of $3,146 in 2022 compared to men's savings of approximately $7,007 in the same year. According to a Vanguard study, women usually have 44% less savings by the time they retire than men. Men tend to have larger account balances not because they save more but primarily because they earn more money.

Women save less than men for a variety of reasons, one of which is the gender pay gap. Women were not allowed to own credit cards until the Equal Credit Opportunity Act of 1974 despite the Equal Pay Act of 1963. According to Rita Soledad Fernández Paulino, a personal financial coach and entrepreneur, this was significant since before that women were unable to manage their finances autonomously, including credit and interest charges. Many women then didn't have role models to teach them about managing debts. These early financial habits can continue through generations, affecting how households handle money. Soledad mentions a lack of relatable financial literacy role models for women, which impacts their financial decisions.

Factors affecting the gender wage gap

Despite women being more likely to graduate from college than men, factors like parenthood, discrimination, and societal norms hold women back financially, according to the National Bureau of Economic Research. These factors contribute to why women struggle to save money.

1. Gender wage gap: Women still earn less than men, with white women earning about 83% of what white men earn. The difference is larger for black and Hispanic women, with black women earning about 70% and Hispanic women about 65% of what white men earn.

2. Caregiving responsibilities: Many women are carers, which can lead to lost wages and reduced retirement savings when they leave work. This affects career growth and income, said personal finance coach Bernadette Joy.

3. Student loan debt: Most federal student loans are taken out by women, making them harder to repay due to lower incomes.

4. Delayed investment: Women are more cautious about investing and tend to have more savings. But there are opportunities to be confident in their investments.

5. Longevity: Women live longer than men, so long-term retirement funding strategies are needed.

6. Social Security benefits: Women receive about 80% more Social Security benefits than men, in part because of lower wages and part-time employment. To improve economic recovery, women need to tackle these issues together, recognizing the critical role of structural issues.

Steps to improve financial stability

To improve financial stability, women can take several steps:

1. Increase knowledge of finances: Recognize your financial status, especially the need for emergency funds and your debt repayment schedule. To improve your financial literacy consult newsletters, podcasts, and internet resources.

2. Set priorities: Prioritize debt repayment before investment if you have high-interest debt because it may limit your financial flexibility. With credit card interest rates being high, this strategy can help close the retirement gap.

3. Seek community support: Talk honestly about money difficulties with other women who are going through similar struggles. Join communities that teach money management skills to get advice and emotional support.

4. Explore savings strategies: Take advantage of high-yield savings accounts to accelerate savings growth through compound interest. Maximize employer retirement plan contributions and consider gradual increases for long-term benefits.