Personal Finance

50% of women say they are behind on retirement savings. Here’s why they face challenges

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Coming up with enough money for retirement is a challenge for all workers.

Women are more likely, at 50%, to say they’re behind, versus just 35% of men, a new report from Goldman Sachs finds.

What’s more, 24% said they are “very behind schedule,” compared to 14% of men.

Nearly half of women — 47% — said they are on track or ahead of schedule when it comes to their retirement savings. They still fell short from a majority of men — 64% — who said the same.

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The findings in the Goldman Sachs report come as women face higher hurdles for the amount they will need to save for retirement. On average, American women live three years longer than men, according to the research.

Women also are more likely than men to retire earlier than they planned, the report found, with 61% of women versus 50% of men. The top reasons women retired earlier was due to health reasons, family care needs or job loss.

For those who are retired, more than half of women — 58% — receive half or less than half of their pre-retirement income, compared to 44% of men.

Meanwhile, just 20% of women receive 70% of their pre-retirement income, the amount some experts say retirees need in order to maintain their standard of living. In comparison, 30% of retired men have income that reaches that level.

“Women are more behind in retirement readiness than men,” said Michael Moran, senior pension strategist at Goldman Sachs Asset Management.

“There’s a number of competing financial priorities that all individuals have to face, but women in particular have to face,” he said.

Why women face unique challenges

One key reason why women’s retirement savings comes up short is they are more likely to take time out of the workforce to care for children or aging relatives.

Women tend to work nine years less than men, which can reduce their retirement savings by 35%, according to Moran. This may also have an adverse effect on the amount of Social Security benefits they receive.

Women also face a persistent wage gap. They earned just 82 cents for every dollar earned by men in 2020, according to the U.S. Census Bureau.

Men may also earn more on the investments in their retirement accounts because they are deferring from larger salaries. That is even though women tend to have better savings habits, including higher participation in voluntary enrollment 401(k) plans, according to a recent Vanguard report.

More immediate financial worries may also get in the way. Amid high inflation this year, 45% of women decreased their overall spending compared to 37% of men, Goldman Sachs found. Women were also more likely to withdraw from their emergency savings, with 24%, compared to 17% of men.

Another factor that may affect women’s retirement preparedness is whether they choose to marry, other research has found.

Recent research from the Center for Retirement Research at Boston College found women who have spent most of their lives married tend to fare worse than never-married women. The reason is largely due to the declining wealth of their spouses. Because never-married women’s wealth has mostly stayed stable, their wealth has increased relative to their mostly married counterparts, according to the report.

An unexpected divorce or death of a spouse can also upend their financial plans in retirement.

One way all women may improve their retirement incomes is by seeking professional advice, which can be personalized to their situation, according to Candice Tse, global head of strategic advisory solutions at Goldman Sachs Asset Management. It may also help reassure their fears, she said.

“A lot of women fear that they have so much riding on their shoulders,” Tse said. “They fear making a mistake. They’re anxious about their finances and they’re less confident.”

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