retirement savings | march 13, 2023
Closing the Gender Gap in Retirement Savings
Addressing barriers to retirement savings for women.
While there is no gender gap in access to retirement plans, women lag far behind men in terms of contributions, savings, and retirement confidence.
Typically lower incomes, higher debt loads—especially student loans—and shorter job tenures are some of the factors contributing to the gender savings gap.
Women could help narrow the retirement savings gap by taking steps that may improve personal finances and building financial confidence.
Sudipto Banerjee, Ph.D.
Vice President, Retirement Thought Leadership
The increased focus on diversity, equity, and inclusion has driven recent research on financial wellness, and racial gaps in retirement savings, in particular, have gained significant attention. But gender1 is an equally important dimension of the retirement savings gap. In 2022, our T. Rowe Price Retirement Savings and Spending Study, which surveys a nationally representative group of 401(k) participants, focused on the gender gap in retirement savings—and the disparities are striking.
Our analysis showed that women were contributing less annually to their workplace retirement accounts and had significantly lower retirement account balances (Figure 1). Notably, the median 401(k) account balance for women was 65% lower than for men.
The Gender Gap in Retirement Savings
(Fig. 1) For women, lower contributions mean less savings
Source: T. Rowe Price Retirement Savings and Spending Study, 2022.
*Estimated annual 401(k) contribution (median expected contribution % x median personal income).
†Median 401(k) balance.
‡How confident are you about retirement (on a scale of 0 to 10)? Percentages based on top 3 boxes, those who rated their confidence levels at 8, 9, and 10.
Therefore, it is understandable that women’s confidence levels in attaining retirement goals were also lower.
The gender gap in retirement savings is a challenge for women who are preparing for retirement, and we understand that there are various social and economic factors that significantly affect women’s ability to save. In our research, we examine how traditionally lower incomes, along with factors such as participation in retirement plans, debt, and job tenure, may be contributing to the gender retirement savings gap.
No Gap in Retirement Plan Access and Participation
Interestingly, we found that there were no overall gaps in access to retirement plans between men and women. In fact, despite differences in the male and female labor forces, retirement plan participation appears consistent among private sector wage and salaried workers between the ages of 21 and 64 (Figure 2).
No Gender Gap in Access to Retirement Plans
(Fig. 2) Retirement plan participation among 21-64 year old wage or salaried workers in the private sector
Source: Author’s calculations from the Annual Social and Economic (ASEC) supplement of the Current
Population Survey (CPS), 2022. IPUMS CPS, University of Minnesota.
Participation Rate = Share of total private sector workforce (with or without access to a retirement plan) who participate in a retirement plan.
However, this apparent gender equality in participation masks disparities and wide variations in the level of participation across different industries (Figure 3). For example, wholesale and retail trade and business and personal services industries employ men and women equally. Despite this, the retirement plan participation rate is significantly lower among women in those industries.
Women in Several Industries Lag in Retirement Plan Participation
(Fig. 3) Retirement plan participation among 21-64 year old wage or salaried workers in the private sector across different industries
Source: Author’s calculations from the Annual Social and Economic (ASEC) supplement of the Current Population Survey (CPS), 2022. IPUMS CPS, University of Minnesota.
Participation Rate (PR) = Share of total private sector workforce (with or without access to a retirement plan) who participate in a retirement plan.
Even in industries that employ significantly more women than men—such as health care and professional services—women still lag behind in retirement plan participation.
There are, however, some bright spots for women highlighted in the research. Although fewer women work in manufacturing and in transportation and communication, their retirement plan participation in these sectors is on par with their male peers. Compared with these industries, women in the finance, insurance, and real estate industries make up a larger share of the overall workforce, and the data show that their participation rate is close to that of their male colleagues.
Retirement Savings and Spending Study
The Retirement Savings and Spending Study is a nationally representative online survey of 401(k) plan participants and retirees. The survey has been fielded annually since 2014. The 2022 survey was conducted between June 24 and July 22. It included 3,895 401(k) participants, full‑time or part‑time workers who never retired, currently age 18 or older, and either contributing to a 401(k) plan or eligible to contribute and have a balance of $1,000+. The survey also included 1,136 retirees who have retired with a Rollover IRA or left‑in‑plan 401(k) balance. NMG Consulting conducts this annual survey on behalf of T. Rowe Price.
1Participants in the survey self‑identified their gender. For the purposes of this research, we use the term woman to refer to an adult who lives and identifies as a female and the term man to refer to an adult who lives and identifies as a male.
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