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3 Helpful Tips for Women to Overcome the Retirement Savings Gap
3 Helpful Tips for Women to Overcome the Retirement Savings Gap
The average 401(k) balance for women is $40,000 less than their male counterparts.
According to the annual Retirement Survey of Workers by Transamerica, in 2024 there continues to be a large gap between median balances of 401(k) plans for women ($44,000) and men ($84,000). Even though women have typically put away less, the dreams of women in retirement are not significantly different than the dreams of men. According to , working women dream of spending their retirement traveling (70%), spending more time with family and friends (60%), and pursuing hobbies (49%). One in four women (25%) dream of doing some form of paid work such as starting a business (12%), pursuing an encore career (10%), and continuing to work in the same field (9%). Twenty-four percent of women dream of doing volunteer work, and 21% dream of taking care of their grandchildren.1
What about the confidence that those dreams will become a reality? Only 16% of those surveyed said they were ‘very confident’ they will be able to fully retire with a comfortable lifestyle. Another 42% indicated they were ‘somewhat confident’ which leaves a large number who are not confident at all! That is what we’d like to address.1
Wage/Income Gap
The first issue is that on average, women are earning less and they are typically saving less.2 With the compounding nature of savings, the more money you put away, the more money you will have when you withdraw those funds. The more money that can compound over time will provide more at retirement. Better savings habits are important to make up the difference.
Combat the Savings Gap with these Helpful Tips
Tip #1: Increase Contribution (Specifically to Meet Employer Match)
If your employer offers you a match in your 401(k) or similar retirement plan, take it! Make sure you’re not leaving any money on the table. The best way to ensure you’re getting the full match is to spread out your retirement plan contributions evenly throughout the year. Some retirement plans have rules about matching on a per-paycheck basis, and you don’t want to miss out on all of the matching you deserve.
Gradually increasing your contribution rate during annual raises or through automatic features like auto-increase are great ways to increase your retirement savings while having a modest impact on your paychecks. New Year’s Resolutions are a great time to make small increases too – just 2% at a time can make a big difference over time, and you’ll be more likely to stick with it!
— Jennifer Pearson, Vice President, OneDigital Retirement + Wealth
Tip #2: Start an Itemized Monthly Budget
When it comes to spending, women make the majority of all consumer purchases in the U.S. When you consider we also feel more financial pressure than men, it’s especially important for us to take control of our money and spending. A budget not only provides a plan for staying on track—but it also means we feel less stress because we have better financial footing and know what to expect. As much of that budget as possible needs to be allocated to long-term retirement savings.
— Mary Caballero, Managing Partner, OneDigital Retirement + Wealth
Tip #3: Seek Guidance
Seeking guidance from a financial professional is extremely beneficial when addressing an issue as important as preparing for your retirement, much like working with a personal trainer when trying to get into shape or a physician when you are trying to get well. Just as a trainer would provide you with expertise, a workout plan and accountability, a financial professional brings experience, personalized strategies, and accountability to help. We all know without an accountability partner that it can be easy to go off track and miss key steps. While it is possible to get in shape or manage your finances on your own, the additional support from a professional can only help accelerate progress and provide greater security for your future.
— Sam Trout, Financial Planner, OneDigital Retirement + Wealth
Start Saving Today!
With the challenges we face, it is crucial to take the steps needed to build your retirement savings. One step you should consider is developing a financial plan. According to the Transamerica survey, just one in five women workers (20%) have a financial strategy for retirement in the form of a written plan, compared with 30% of men workers.3 Everyone needs to make sure they have thought through their goals and objectives, preferably working with a financial advisor who can guide them in order to help maximize their situation with the resources they have. Making the right decisions today can make a huge difference and help you progress towards your Dream Retirement!
For more savings tips, read: 3 Helpful Tips to Start Building Emergency Savings.
124th Annual Transamerica Retirement Survey of Workers https://www.transamericainstitute.org/docs/research/generations-age/multigenerational-workforce-life-work-retirement-survey-report-2024.pdf
2What holds women back from saving — and what they can do about it https://www.cnbc.com/select/why-women-dont-save-as-much-as-men/
324 Facts That Illuminate Women's Precarious Retirement Prospects https://www.transamericainstitute.org/research/publications/details/24-facts-that-illuminate-women-precarious-retirement-prospects
Investment advice offered through OneDigital Investment Advisors, an SEC-registered investment adviser and wholly owned subsidiary of OneDigital.
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