Disparities in Savings Show Need for Retirement Help for Women
Women place more importance on advice that fits into their work or personal schedule, as opposed to men who place more importance on advice that alerts them to critical developments in their accounts, a T. Rowe Price survey found.
Baby Boomer women have a median 401(k) savings balance of $59,000, less than half the $138,000 median that men have saved, according to a T. Rowe Price survey. Even Millennial women have a median savings balance that is $30,000 lower than their male counterparts.
On average, women earn a median of $27,000 less than men, and they are deferring less of their income to 401(k)s. Sixty-six percent of the women contributing less than the recommended rate say they are saving as much as they can afford. Only 10% of women are saving additional money for retirement outside of their 401(k) plan, whereas 32% of men are doing so.
Women are more likely than men to say they will continue to work in retirement due to needing the money. Forty-six percent of women believe they will need to reduce their standard of living in retirement, whereas only 37% of men share this outlook.
Conversely, nearly half of men think they will continue to live as well or even better in retirement, whereas only 33% of women share this optimistic outlook.
Within the first five to 10 years of retirement, 33% of women are either widowed or divorced, compared to 17% of men. Looking out to 11 years, the number of single or divorced women increased to 45% , while the number of single or divorced men barely changed at 18%.
“The gender gap is contributing to a domino effect on women’s finances,” says Judith Ward, senior financial planner at T. Rowe Price. “Lower earnings can have an effect on their current financial decisions, which ultimately impact women’s financial future, including their retirement savings. As women, it’s critical for us to be proactive when it comes to our money and to seek the guidance and education that is necessary to put us on a path toward a successful financial future.”
Both men and women cited ease of use as their most favored attribute for financial advice. However, women place more importance on advice that fits into their work or personal schedule, as opposed to men who place more importance on advice that alerts them to critical developments in their accounts.
T. Rowe Price’s findings are based on a survey of 3,005 adults conducted by NMG Consulting. The full findings can be seen here.