skip to Main Content
This Is What Women Need To Do To Catch Up In Retirement

This is what women need to do to catch up in retirement

Women need to start catching up: Men’s average 401(k) balances are more than 50% higher than the average for women.

Studies show women make better investors than men, but you wouldn’t know that looking at women’s retirement accounts.

Here are the harrowing numbers:

  • Men’s average 401(k) balances are more than 50% higher than the average for women, according to a 2015 Vanguard study.
  • On average, men contributed about 22% more to individual retirement accounts of all types in 2014 than women, according to recent estimates from the IRS.
  • When it came to end-of-year fair market values for IRAs, the average for men was nearly $63,000 more than for women, the IRS reports.
  • In 2014, nearly half of elderly unmarried women receiving Social Security relied on those benefits for 90% or more of their income, the Social Security Administration says.

What gives? Blame the pay gap that manifests itself as a retirement gap. To borrow a Beyonce-ism, perhaps it’s time for women to “get in formation” and tackle this gap. Here’s where they can begin.

1. Start now

You’ve heard this advice before because it’s true: The earlier you start investing, the better off you’ll be when retirement comes. This is an especially important lesson for women: A recent NerdWallet study found that to build a comparable retirement fund, the average American woman must invest the equivalent of $1.25 from her wages for every $1 the average man invests.

Where can women begin? At work. Max out the 401(k) match if your employer offers this type of benefit. This free money will help accelerate whatever contributions you’re able to make.

If you don’t have a 401(k) match or you just want to build supplementary savings, consider a traditional or Roth IRA. What’s the difference? Traditional IRAs offer an upfront tax deduction, whereas Roth IRAs allow tax-free distributions in retirement.

Leave a Reply