Retirement Savings: Who Does a Better Job — Women or Men?

When it comes to retirement planning, men and women exhibit some stark differences. At most income levels, women are more likely to participate in their employer retirement plans, yet women’s account balances tend to be lower, according to recent research by The Vanguard Group, Inc. Women contribute more And not only do women participate more — seventy percent of women are likely to enroll in voluntary enrollment retirement plans, compared to 63% of men — but they contribute a higher proportion of their incomes. For example, women who make less than $30,000 annually contribute 4.9% versus men who contribute 4.6%; and women who make more than $100,000 annually contribute 9% versus men in the same income bracket who contribute 8.1%, the Vanguard study finds. While both men and women can be taught to value savings when they identify their financial goals, those who don’t save often view saving as “sacrificing against their goals because they are missing out on something,” says Florida-based Joshua Sheats, certified financial planner and host of Radical Personal Finance. In addition, men are more naturally prone to taking risks, which could impact their saving habits, he says based on what he has observed. The Paradox… men have greater savings But while women demonstrate a stronger commitment to savings plans, men end up with more stashed away. Some factors contributing to this trend might be that women tend to have shorter job tenures and lower income than men, on average, Vanguard says. Another factor impacting women’s long term savings could be the many responsibilities women often have, says El Dorado Hills, Calif.-based Scott Draper, a certified financial planner with Thrive Financial Planning. “Women also tend to be drawn in more directions — family, work, church, community commitments — than men, as a general observation,” Draper says. “ As a result, the limited resources of women tend to be spread further and this ends up being reflected in the balances of their savings plans.” The average account balance in 2013 was $78,007 for women, versus $121,201 for men, Vanguard data show. Understanding the product is key To make the most of employer retirement plans, Draper says to know both the benefits and limitations of the plans before making a contribution decision. “You should also have a realistic idea of what your personal goals are for retirement,” Draper says. “Next, you should maximize the benefits of the plan to your unique situation. Depending on your personal experience with investing, I recommend some professional advice in maximizing the benefits or your employer retirement plan.” Consider the long term As a woman, it is also important to consider your retirement savings if you opt out of work to care for children or aging parents.  These decisions may seem like choices that will impact your next year, but there is a significant ripple effect well into your retirement. Using a tool like the Boldin Calculator can help you visualize your future and what you will need.