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.
In a nutshell, women's lower salaries + lower contribution rates = lower retirement account balances.
- Judith Ward, CFP(R), Senior Financial Planner
At some point in retirement, women may be solely responsible for their finances--whether by choice or not.
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.
A. Career choice may be one factor responsible for the income difference between men and women
B. Women have more difficulty contributing
C. 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
T. Rowe Price engaged NMG Consulting to conduct a national study of 3,005 adults aged 21 and older who have never retired and are currently contributing to a 401(k) plan or are eligible to contribute and have a balance of at least $1,000. We surveyed an additional 1,005 who have retired with a Rollover IRA or left a balance in their 401(k) balance plan. The online survey was conducted from July 24, 2018, to August 14, 2018. This is the fourth in a series of participant surveys, and data from prior surveys is used in this report for comparison purposes.
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. 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).
Contact your T. Rowe Price representative to find out how we can take your plan to the next level.