Women Worse at Retirement Saving: Here's What to Do
Start putting your needs first and don't be afraid to talk dollars and cents
Investment firm Scottish Widows revealed that, at 10 percentage points, the gender gap in retirement saving has reached a record high, equating to a difference of $48,100. Though the report was specific to the UK - stating that their women save an average of $1,252 less than men each year - the United States sees its women lagging behind, too.
Vanguard, an investment company, found that its male clients' account balances were 50 percent to 60 percent higher than those of women. Men's average account balance was $94,063, compared with women's $59,104, while their median account balance was $31,388, compared with women’s $20,877.
The report acknowledged that women in its sample tended "to have lower incomes and shorter job tenure than men."
However, experts also cite personality traits and lifestyle choices as reasons behind women's savings shortcomings, not just the circumstances of their employment.
"Women typically watch after the 'village' not after 'self,'" said Kimberly Friedmutter, an acclaimed life management expert. "It literally takes a village to urge a woman to spend on herself, let alone to save for herself because we are nurturers by nature. Women are also positively driven versus negatively driven, meaning we don't often see our futures as consequential. We overestimate our health and wealth, not fully believing in the rainy day."
And while women need to understand that "rainy days" are possible, the tendency for women to view their savings as the "rainy day" fund can be just as detrimental, according to Lynn Graves of Scottish Widows. In an interview with CNBC, Graves said women too often view their savings as a pot to dip into to cover unexpected costs at any time, and not as a fund to pay their expenses when the time comes that they either cannot or do not wish to work any longer.
And as people continue to live longer while having fewer children, ever more older retirees will be completely reliant on their pension or retirement funds to support themselves.
"It’s statistically true that women live longer than men," said Xavier Epps, owner of XNE Financial Advising. "Thus, saving more should be their top priority, but given the choices and priorities women may have to make or take on throughout their lives, like caring for children or elderly parents or in-laws, it becomes a very difficult task to keep up, especially considering men are more likely to work in higher-paying jobs and more likely to work full time."
According to TIME, other reasons women may have less retirement savings or opt out of investing are that they tend to be insecure about the subject of money; they rely too heavily on others for financial know-how; and they're not always adept at translating abstract figures into concrete goals.
As a solution, financial therapist Amanda Clayman advises women to trash the taboo and start talking money. “To eliminate the intimidation factor, include topics of spending and saving in your regular conversation with your spouse or a trusted friend," she said.
Epps suggests "tighter household budgets and more bargain shopping" which, according to a recent Citi Economic Pulse survey, many women have already begun employing with 76 percent regularly clipping coupons, and 38 percent buying in bulk.
Only a third of women (31 percent) are prioritizing current debt repayments, but Epps says, "Plan to get out of debt sooner; the faster you're out, the sooner you can contribute more to retirement."
Also, according to Laura Vanderkam, author of "All the Money in the World: What the Happiest People Know About Getting and Spending," women should begin freeing themselves of "the idea that they would be secondary earners and a man would be responsible for investing and long-term saving."
Lastly, TIME advises that women stop thinking theoretically and focus on the numbers at hand: "Make your financial goals as detailed as possible, including an estimated cost, to increase the likelihood that you’ll follow through with what’s necessary to achieve them."