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Retirement Insights

Helping Millennial Women Close the Retirement Savings Gap

Plan sponsors have an opportunity to provide engaging and relevant financial education that resonates with women.

Judith Ward, CFP®, Senior Financial Planner

Key Insights

  • Recent data show that the retirement savings of millennial and baby boomer women continue to lag behind their male peers.
  • Millennial women make less money than their male counterparts, but have similar levels of debt. Given this income difference, debt may affect women more harshly.
  • Millennials look to their workplace plan as a top source for financial advice. Women place a higher value on advice that’s convenient and easy to use.

The wage gap and lifetime income gap between men and women presents many challenges for those preparing for retirement.

Recent research from T. Rowe Price1 finds that while there is slight progress among women saving for retirement, the gap between men’s and women’s retirement savings persists; a likely follow-through resulting from lower lifetime earnings.

The largest disparity with income and savings is among working baby boomers who are on the cusp of retirement. However, the savings behavior among millennial women is also concerning. Millennial women seem to be on the same trajectory as their boomer counterparts. In a nutshell, lower salaries coupled with lower contribution rates results in lower retirement account balances.

Opening Quote In a nutshell, women’s lower salaries + lower contribution rates = lower retirement account balances. Closing Quote
— Judith Ward, CFP® Senior Financial Planner

Millennials are the largest generation in the U.S. labor force.2 While retirement is decades away for them, today’s decisions can significantly affect their future financial security.

We have the opportunity to help these women strengthen their financial footing and make more informed decisions. We’ve included three action steps for plan sponsors and advisors to consider as well as a “Retirement Checklist for Women” to share with individuals in the hopes of improving retirement outcomes.

(Fig. 1) Median 401(k) Balance of Working Baby Boomers
Men and Women, 2016–2018

Source: T. Rowe Price Retirement Savings and Spending (RSS4), 2018.

Greatest Disparity: Working Baby Boomer Women

On average, women live longer than men. At some point in retirement, women may be solely responsible for their finances—whether by choice or not. This underscores the need to engage with the household finances, investments, and retirement planning throughout their lives.

Women need to consider, however, the possibility of a financial disruption. Our survey found that within the first 5 to 10 years of retirement, one-third of women (33%) were either widowed or divorced, compared to 17% of men. After 11 years of retirement, the number of widowed or divorced women increased to 45% while the number of men who were widowed or divorced barely changed (18%).


Almost half of women who have been retired 11 years or more are widowed or divorced compared to just 18% of men

We found that working baby boomer women are contributing less to their 401(k)s than men—a median of 7% compared with 10% for men. Lower salaries, along with contributing less, resulted in a median 401(k) account balance of $58,700 compared with $138,200 for similarly aged boomer men.

There may be many reasons for this disparity that accumulates over the span of women’s careers. Data from Pew Research Center finds that more women (40%) than men (24%) report taking “significant” time off to care for children or family members.3 Time out of the workforce or adjusting careers for caregiving may result in lower earnings over time and a lost opportunity to save. When planning for retirement, this difference may not be as problematic as it might seem if there is adequate household income to allocate to retirement savings.

The Gap Between Men’s and Women’s Finances Emerges Early

Similar to past trends, our study found that millennial women make less money than their male counterparts—a median annual income almost $30,000 less than the median for men as seen in Figure 2.

While women we surveyed have seen a slight income increase over the last three years, that hasn’t translated into them saving more.

Millennial women are also contributing to their 401(k)s at a lower rate (5%) than millennial men (8%). As a result, the 401(k) balance lags behind.

(Fig. 2) Income and 401(k) Balance of Millennials
Men and Women, 2016–2018

Source: T. Rowe Price Retirement Savings and Spending (RSS4), 2018.

Opening Quote While the women we surveyed have seen a slight income increase over the last three years, that hasn’t translated into them saving more. Closing Quote
— Judith Ward, CFP® Senior Financial Planner

Key Differences Between Women and Men

Beyond the 401(k) plan, our study uncovered other differences between men and women that may affect their financial futures.
  • Career Choice

    Among our respondents, millennials were the most educated generation. Over 53% of men and 44% of women reported having at least a college degree. Career choice may be one factor responsible for the income difference between men and women.

Our study found:

  • More women—roughly three times the number of men—were employed in the health care and social assistance field where the average annual salary is $45,655.4
  • In contrast, men were twice as likely to work in the information industry, where the average annual salary is $72,640.4
  • The Debt Dilemma

Given the income difference between millennial men and women, debt levels may affect women more harshly even though both had similar types of debt and outstanding balances.

  • Three-quarters of millennials hadcredit card debt. The medianoutstanding credit card balance isapproximately $3,000.
  • Nearly half of millennials had a carloan. The median outstanding balanceis approximately $12,000 for men and$13,000 for women.
  • Almost one-third of millennialshave student loans. The medianoutstanding balance is around$17,500 for men and $15,600for women.

Not surprisingly, a higher debt to income ratio may become a barrier to saving for women.

When workers were asked why they were contributing less than recommended to their workplace plan, nearly two-thirds of women said they were contributing all they could afford. Additional debt beyond student loans prevented nearly one-third of women from saving more.

On the contrary, one-third of men reported not saving more in a workplace plan because they are saving for retirement through other vehicles.

  • Emergency Planning

    A key element of financial security is being able to deal with the unexpected. For the very reasons that women aren’t saving for retirement, they also reported that they have less resources to deal with financial shocks. After credit cards, single women reported at a higher level than single men that they would rely on financial help from family and friends.

    The good news is that nearly one-third of all men and women (either single or married) had an account established for emergencies with another 20% mentally earmarking funds for that purpose. Unfortunately, about half of men and women said they would need to rely on credit cards if they were faced with an expense that required more cash than they had available.

    Interestingly, twice the number of single men than women said they would be able to pay for an expense from after-tax personal savings.

Helping Millennial Women Close the Retirement Savings Gap

1 The Retirement Savings and Spending (RSS) study is a nationally representative annual survey of workers ages 21 and above who are either currently participating in a 401(k) plan or eligible to participate and have a plan balance of at least $1,000. Along with 3,000 workers, the 2018 RSS study also includes a sample of 1,000 retirees who had a Rollover IRA or a left-in-plan 401(k) balance.
2 “Millennials are the largest generation in the U.S. labor force,” Pew Research Center, Washington, D.C., April 11, 2018. https://www.pewresearch.org/fact-tank/2018/04/11/millennials-largest-generation-us-labor-force/
3 “On Pay Gap, Millennial Women Near Parity,” Pew Research Center, Washington D.C., December 11, 2013. https://www.pewsocialtrends.org/2013/12/11/on-pay-gap-millennial-women-near-parity-for-now/
4 Bureau of Labor Statistics, U.S. Department of Labor, Current Employment Statistics (National), on the Internet at https://www.bls.gov/web/empsit/cesbmart.htm#Overview (visited April 2019).

Important Information
This material is provided for general and educational purposes only and is not intended to provide legal, tax, or investment advice. This material does not provide fiduciary recommendations concerning investments or investment management. This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.

The views contained herein are those of the authors as of June 2019 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.

All investments involve risk. All charts and tables are shown for illustrative purposes only.

© 2019 T. Rowe Price. All rights reserved. T. Rowe Price, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks of T. Rowe Price Group, Inc.

T. Rowe Price Investment Services, Inc., Distributor.


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