How Much More Do Women Really Need to Save for Retirement?


Life isn’t fair. That’s a pretty common lesson we learn by, I don’t know, age five. But some injustices are more infuriating than others — one of these injustices is that women need to save more money for retirement. Which is why it was so disappointing to read that women have less saved than men do for retirement. A recent survey by Student Loan Hero found that women had an average of $45,614 saved for retirement. Not a bad start! Except men had $90,189 set aside. The study also found that only 52 percent of women have a retirement savings vehicle, compared to 71 percent of men. A pattern is beginning to emerge.

If you’re concerned about how you’re going to save for retirement, you’re not the only one. Only 30 percent of women aged 55-64 said they feel well prepared for retirement. The fact of the matter is women need to save more money for retirement, yet they aren’t saving as much as men are. Let’s examine why women are saving less and why they should be saving more.


Issue 1: The Gender Pay Gap

The gender pay gap is a difficult issue to resolve and one that arises from a variety of complicated factors. Regardless of its cause (sexism and gender stereotypes are pretty big ones, but so is our childcare system) women earned 82 percent of what men earned as of 2017. Remember, this discrepancy is even larger for women of color. But take note that women have at least 82 percent less funding at their disposal.


Issue 2: The Investment Gap

If women are paid less, it makes sense that they are also investing less. Female-focused financial firm Ellevest dubbed this phenomenon the “Investment Gap.” A recent survey by Lexington Law asked men and women what they’d do with an extra $1,000. The men were 35 percent more likely to say they would invest the money. But why? We already know that women have less money to invest, so that’s one factor. Some financial experts believe it’s because the investment space is traditionally male-dominated.

That’s why firms like Ellevest are tailoring advice to help women preparation for their longer retirements. And don’t worry, there’s some good news. When women invest, they earn higher returns than men (by 40 basis points on average). I’ll take that as a win!


Issue 3: Life Expectancy

Alright this isn’t exactly a problem — cheers to living it up with my ladies in my 80’s — but the fact that women live longer than men does mean we need to save more money for retirement.

On average women are living six to eight years longer than men, generally outliving their husbands by 14 years. With the median age of a woman losing a spouse at 59 years old, many women aged 55-64 are worried about outliving their assets.


The Answer

It’s number time. How much money should women have saved for retirement so they can live comfortably? In short, they need to have six to eight more years worth of living expenses saved than men do. Unfortunately, it’s pretty impossible to predict the exact number needed. We all have varying lifestyles, medical needs, and live in different regions. Working out a specific number is tricky, but you should consider these options.

  1. Aim for 90 percent replacement (during the years you are likely to live during retirement) of your pre-retirement take-home pay.
  2. Multiply your ending salary by 10 to 15 to estimate the potential amount you’ll need to save saved.
  3. Save at least 10 to 15 percent (more if possible) of your annual income in your retirement accounts every year.

Taking full advantage of employer contributions, investing their money, and fighting for higher salaries and benefits are all great ways to start amping up your retirement saving efforts.


Get Techy

Of course we wouldn’t leave you without some handy apps to check out! There are plenty of apps on the market designed to help you take retirement planning into your own hands. Literally.

Betterment’s investment portfolio building tools will help you gain investment confidence. Plus, when the market shifts, Betterment will rebalance your portfolio automatically so your goals stay on track. The aptly named app Robinhood allows you to trade and invest stocks, free of charge. You can always take advantage of apps that help you budget better (like YNAB) so you can afford to put more money towards retirement.


P.S. Check out these tips on how to save for retirement if you don’t have an employer-sponsored plan!