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Why Women Have Less 401(k) Savings than Men on Average

Why Women Have Less 401(k) Savings than Men on Average

While women have made significant and well-publicized progress in educational attainment, employment, and earnings, there are still significant discrepancies regarding 401(k) savings.

According to a new 2023 Financial Life Benefits Impact Report from Bank of America, the average 401(k) account balance for men ($89k) is 50 percent greater than that of women ($59k)

This gap is big enough to put women on notice that a comfortable retirement isn’t a sure thing unless they start socking away more for retirement.

In this article, we delve into the key reasons why, despite women having better saving habits (consistently enrolling in their plans at higher rates and contributing a bigger cut of their paychecks) , they tend to have less 401(k) savings on average.

By shedding light on these factors, we hope to inspire a deeper understanding and initiate a positive change in the landscape of personal finance.

  1. Gender Pay GapLower lifetime earnings are a fundamental issue affecting women’s ability to save for retirement.
    According to Pew Research, the gender gap has remained relatively unchanged over the past 2 decades.On average, American women earn less than their male counterparts in many industries. Just last year, women earned an average of 82 percent of what men earned.

    This income disparity directly impacts how much women can allocate toward 401(k) accounts. Only 7 percent of women contribute the maximum amount the IRS allows in 401(k)s, compared to 10 percent of men, leading to a disadvantage in accumulating retirement savings over time.

    The fix: Addressing and eliminating the gender pay gap is essential for fostering equality in retirement savings.

  2. Women Provide A Majority of Unpaid Family Caregiving
    While both men and women may choose to become parents, women pay a bigger price for becoming a parent — something commonly referred to as the “motherhood penalty.”.
    Taking time off work to care for children, a spouse, or an aging family member during peak earnings years or reducing working hours to balance work and family responsibilities can significantly impact a woman’s earnings and consequently reduce her ability to contribute to her 401(k) plan.The financial sacrifices made during these critical years can have long-term consequences. A study found that the lifetime earnings of a woman with one kid are 28 percent less on average than a woman without kids, and each extra kid lowers lifetime earnings by another 3 percent.Another study conducted by the U.S. Chamber of Commerce found that 32 percent of women who leave the workforce to care of their kids end up never re-entering the workforce.

    The fix: It’s essential to find ways to support working parents and ensure equal opportunities for both men and women to save for retirement.

  3. Women Have to Fund a Longer Retirement with Less Income
    On average, women tend to outlive men, meaning they must fund a longer retirement period.
    The life expectancy for women in 2021 was 79.1 years, compared to 73.2 years for men.This extended lifespan places an additional financial burden on women, as they need to stretch their savings and investments over more years. The longer you live, the longer you’ll need income to support your lifestyle and healthcare needs.Unfortunately, on average, women’s Social Security benefits are 80 percent of what men receive. Benefits are based on a worker’s 35 highest earning years. Women with career disruptions risk not having 35 years with positive earnings, and the pay gap noted above further reduces women’s benefits.

    Consequently, women need to save more aggressively and efficiently to bridge the gap and ensure a secure retirement.

    The fix: Addressing this issue requires raising awareness about women’s unique retirement planning needs and developing strategies that account for their longer lifespans.

  4. Women Have More Student Loan Debt Than Men
    Another significant factor affecting women’s 401(k) savings is the burden of student debt.
    Women who hold bachelor’s degrees borrow 4.27 percent more in loans than men. This contrast is starker among associate’s degree holders, where women borrow a whopping 24.9 percent more than their male counterparts.This explains why women often face a higher student loan debt-to-income ratio compared to men. This imbalance can limit their ability to save for retirement, as a considerable portion of their income may go toward loan repayments.The fix: Addressing student debt and exploring strategies to make education more affordable for women can empower them to save more effectively for their future.


The disparities in 401(k) savings between women and men are influenced by various factors, including the gender pay gap, the challenges women face in balancing work and family responsibilities, the longer retirement period women must fund, and the burden of student debt.

Recognizing and addressing these issues is crucial for achieving gender equality in personal finance. By advocating for fair pay, supporting working parents, promoting retirement planning tailored to women’s needs, and addressing the student debt crisis, we can create an environment that empowers women to build substantial 401(k) savings and enjoy a secure and comfortable retirement.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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