• Fri, May 4 2012

Working Women And Retirement: Are We Doing Enough?

I can still remember the amazing feeling of finding a job that contributed to a 401k. It was one of those life moments when you can actually sense yourself maturing. Like, one minute you were a young adult fresh out of college who still ate leftover pizza for breakfast and celebrated “Thirsty Thursday,” the next minute you’re a grown-up who is planning ahead for their retirement. It’s a day like that where your “job” becomes your “career.”

I’m proud to say that I’ve been contributing to a 401k at the highest matched level of my employer since I was 22 years old. I can still remember finding out what “profit-sharing” meant and being completely ecstatic that my account would get its own little year-end bonus. I’ve enjoyed watching my account’s progress over the years, thoroughly reading every quarterly newsletter and increasing my contribution whenever possible. Honestly, I feel proud about my financial preparedness.

But am I in the minority when it comes to working women? Am I even doing enough?

ING Retirement Research Institute recently released information showing that women as a whole are woefully under-prepared for retirement. As summarized nicely by ForbesWoman, “…a woman’s total retirement assets, both in and out of the workplace, averaged less than 70% of a man’s comparable savings. A much higher percentage of women (47%) than men (31%) reported having less than $25,000 in their employer retirement plan. Meanwhile, fewer women (67%) than men (76%) were receiving their employer’s full matching contributions.”

Um, just in case we all forgot another interesting statistic, women also tend to live longer. That might make a good retirement account even more important.

Obviously, there’s a gap in women’s financial plans that needs addressing. Some of the proposed reasons behind our meager retirement accounts are the lasting effects of pay disparity, as well as time off work often taken to raise children. After all, companies like mine award profit-sharing and businesses according to longevity. Women who take time off to stay home with the kids will never compare to those who started working for the business in their 20s and retired from the same company 46 years later.

But demographics are changing! More and more women are choosing not to take time off when they have kids or simply to forgo the parenting option all together. While it’s still debatable whether or not the pay gap exists, it is definitely getting smaller. Women are earning more degrees, possibly laying the way for higher salaries in the future.

Are retirement savings and these troubling statistics just a leftover fact of eras past? I can’t help but wonder if as newer generations take over in the labor force, these imbalances won’t even themselves out. After all, it’s hard to assume that women behave that much differently when it comes to financial planning. In fact, we’re normally referred to as the more pragmatic of the sexes, which might lead you to believe that we would be more concerned with saving for the future.

Those numbers are very frightening, but I can’t help wondering if they are just a lagging indicator. After all, I feel proud of my pretty little nest egg that I’ve started, but I don’t feel alone in that quest. Every young person I know is planning for the days after Social Security runs out. We all seem pretty aware that our retirement will be our own responsibility.

ING suggests that women have less knowledge when it comes to retirement planning. If that’s true, then it’s a problem easily fixed. Let’s start talking about retirement options, and how to make the most of our money.

What do you think ladies? Are you planning ahead for your retirement? Do you think women are less interested in financial planning than men? Give me your suggestions for how to fix this problem in the comments.

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  • Avodah

    Have you ever read or listened to anything by Milton Friedman about “equal pay”? I think you would learn a lot.

    As for women being worse off in retirement- maybe they go into professions that don’t pay as well?

  • Eileen

    I have a 401(k). I set it up as soon as I was eligible and more than meet enough to get the matching. I thought it was a no-brainer – but I have female AND male coworkers who haven’t done the same. My guess is it’s more of an educational/class barrier – the people I know with financially secure parents and who went to college all signed up for retirement benefits as soon as they had jobs that offered them.