Women Have To Save Twice As Much As Men For Retirement

Women make up about half of the U.S. workforce. We own almost 12 million businesses. A full 40% of us are the breadwinners in our households. By most metrics, we’ve come a long way to claim our place in the economy.

So after our careers are over, how come we can’t retire as comfortably as men? Turns out, to end up with as much money at retirement as a man, a woman has to save nearly twice as much of her earnings during her working life.

Um…what?

Here are three reasons why retirement feels out of reach for many women — and the three ways we can get there, starting today. How? The same way we do everything: harder, better, and smarter.

Parenting Penalty: Women are the ones who usually leave the workforce to raise kids (and care for aging parents). This means we’re drawing a salary for an average of nine fewer years than men are.

Save Harder: Flat out: You have to save more money during your working years. Start with your employer-sponsored retirement plan if you have one. In 2018, you can put up to $18,500 in a 401(k). Try your best to hit that limit. And if you get a raise or a bonus, put it there. If you’re a freelancer — or your job doesn’t come with a 401(k) — begin with a Roth IRA (the annual max is pretty low, $5,500 a year) then ramp it up by opening a SIMPLE IRA or SEP-IRA, which have much higher limits.

Gender Pay Gap: Like an annoying college boyfriend, that old gender bias just won’t take a hint and go away. (While the gap is closer for millennials, in general, women still make 80 cents for every dollar a man brings home.) Since you have to make money to save money, this knocks a big hole in women’s retirement savings.

Bargain Better: Don’t be shy about asking your boss, or potential employer, for what you deserve. And know that you’ve got the law on your side. In 2009, President Obama signed the Lilly Ledbetter Fair Pay Act, which makes it easier to challenge discriminatory pay practices in court. If you have to take on your biased boss, it’s easier these days.

Risk Aversion Women tend to be less adventurous investors than men. Playing it cool is a plus in the stock market, but an overabundance of caution can make your retirement savings stagnate.

Invest Smarter Women are more likely to put their assets in cash or in money market funds than in stocks, mutual funds, and ETFs. This strategy has historically meant low risk…and low rewards. Women have to combine their best investor traits (a recent survey found we’re disciplined, patient, and open to learning) with a willingness to put a bit more skin in the game. My advice: Ask a fee-only financial planner—who’s paid by the hour, not on commission—to create a customized strategy just for you. Start your search at the National Association of Personal Financial Advisors.