Women save more for retirement but lag men

Lower income, less savings, higher health costs and longer life expectancy contribute to the disparity, but anecdotal and statistical evidence point to a shrinking margin

By Greg Iacurci

Sep 15, 2015 @ 12:01 am EST

Women are lagging men in terms of retirement savings by a sizable margin, but that gap is shrinking.

According to a soon-to-be-released study by Financial Finesse, a provider of financial wellness programs, there's a 26% gap in retirement preparedness between women and men. While both sexes are projected to have a shortfall relative to what they'll need in retirement, the situation is bleaker for women, who will be short $268,000 compared with men's $212,000, according to the annual report, the 2015 Gender Gap in Financial Wellness.

That calculation considers the shortfall in savings needed to replace 70% of income in retirement for the median 45-year-old man and woman.

However, women face additional challenges in that they have lower incomes and have saved less, but are faced with higher health care costs and longer life expectancy. Taking those factors into account, the gap reaches a whopping 95%. In other words, men need an additional $267,233 in savings while women need $522,262.


“The gap between men and women is huge,” said Lillian Meyers, founder and president of Meyers Financial.

Melody Juge, founder and managing director at Life Income Management, said the divide is partly due to women and men often having dissimilar career trajectories — women generally make lower wages, leave the workforce to have children and are more likely to be caretakers for older family members, for example, all of which could lead to lower retirement savings.

Scot Hanson, financial adviser at EFS Advisors, said many of his female clients seem to feel more responsible than men for family members, whether by helping children pay for college or helping put a down payment on a child's or grandchild's house. One client, he said, used $60,000 of a deceased husband's $100,000 life insurance policy to give gifts of $20,000 to each of her three children.

“They feel the ramifications [of their actions] sometimes 10 years later,” Mr. Hanson said.

2015 is the first year Financial Finesse has put a hard-dollar figure on the gap in retirement preparedness, making it impossible to compare that statistic to past studies. The firm's research shows, though, that women have improved over men in a slew of financial wellness categories since 2012. In categories such as being on target for retirement, having an emergency fund, paying off credit cards in full, doing a portfolio fee analysis and updating beneficiary designations, women showed increases of approximately four percentage points, while men dipped in each category.


Erik Carter, senior resident financial planner at Financial Finesse, said the wellness margin between the sexes is shrinking, and has been since at least 2012. Mr. Carter attributes this in part to women being more likely to use financial education and wellness services than men. Mr. Hanson said he's also generally seen women be a bit more receptive to financial suggestions, counseling and programs through employers.

The number of employers offering financial wellness services has been climbing, meaning more women have access to them at work. The number of clients Financial Finesse works with has more than doubled since 2012, a spokeswoman said. The firm works with more than 600 corporate clients, reaching 2.4 million employees. Further, a recent Bank of America Merrill Lynch survey shows the number of companies with financial wellness strategies in place grew to 24% from 20% over 2013-15. The largest increase occurred among large employers.

Diane Woodward, financial planner at Oak Tree Wealth Management, said that women, in her experience, are more likely to ask for help in planning for their retirement. But they also often want to invest less in stocks, which contributes to a savings shortfall, Ms. Woodward said. Female investors need to remember that they're not “safe” just because the balance of an account doesn't fluctuate, she said.

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