4 Retirement Saving Challenges Women Face—and How to Transcend Them

The role of a workplace defined contribution plan, such as a 401(k) or 403(b), is pivotal in helping working Americans save for retirement. When it comes to retirement planning, however, women are on uneven savings ground. To better position your female employees for retirement readiness, it's important to understand the unique challenges women face. Let's examine some key factors and strategies for helping female investors stay on track toward their retirement goals.

 

1. Women Generally Live Longer Than Men but Earn Less
According to a 2019 study by the National Center for Health Statistics, the average life expectancy is 76.1 years for men and 81.1 years for women. How does that affect retirement planning? The longer a person lives, the longer their retirement nest egg needs to last. Add in the uncertainty of social security benefits and health care, and it’s clear women need to plan differently than men.
 

When someone first enters the workforce, saving for retirement often seems like the lowest priority; instead, more immediate goals and concerns, such as paying down debt or saving for a house or family, take precedent. This is a mind-set worth changing.
 

According to recent data from the U.S. Census Bureau, women earn an average of 80.7 cents for each dollar men earn, which can cause them to save less for retirement over time and can even affect their social security and pension benefits.
 

Help women overcome these hurdles by encouraging them to start saving as early as possible. Focus a campaign toward female employees, explaining the critical advantages of saving in a 401(k) plan. Make it easier to save by incorporating plan design features, such as automatic enrollment and automatic deferral increases, to help supercharge their participation rates.

 

2. More Women Tend to Work Part-Time
According to the Bureau of Labor Statistics, almost 25 percent of employed women hold a part-time position (compared with 12 percent of men), and working women are more likely than men to interrupt their careers to take care of their family. When workplace retirement plans exclude part-time workers (female or male) from participating, it denies them access to a critical retirement savings vehicle.
 

Review your company's retirement plan and revisit eligibility rules; consider easing eligibility standards to allow part-time employees to join. The SECURE Act, a sweeping legislation passed in December 2019, included provisions that mandate the expansion of retirement plan eligibility for part-time workers.

 

3. Women Tend to Look at Investing Differently
According to recent research, women tend to make more conservative investment decisions than men. Although this may be explained by the relative inequity in wages, conservative investing (which may be entirely appropriate based on an investor's unique goals and risk tolerance) can hinder the ability to realize maximum growth in an account.
 

Provide educational resources to help communicate the benefits of long-term investing. Target-date funds (a preset blend of investments that automatically shifts from aggressive to conservative over time as an investor nears retirement) may be a useful tool for helping female investors realize the true potential of their investments.

 

4. Difficulty in Talking About Money
Retirement planning and finances can be uncomfortable topics of conversation. Some may consider them too personal; others may be intimidated by the subject matter. It can be especially difficult for women if they aren't the family's primary earner or don’t handle the household finances. One survey found 61 percent of women would rather discuss the details of their own death than their money.
 

To help female employees feel confident discussing retirement savings, it may help to remind them that retirement planning professionals, such as your plan's retirement advisor, are experienced in helping people create financial road maps.


Retirement planning can be daunting—especially for women with the factors outlined here working against them. Workplace savings plans play a critical role in providing women the tools they need to set retirement goals and chart a path to achieve them. And an employer that has its employees' best interests top of mind can make all the difference.