Gender gap remains wide when it comes to retirement savings

The coronation of Vice President Kamala Harris as her party’s nominee for President at the Democratic National Convention this week highlighted the tremendous strides made by women in American politics.

Clearly there remains a long way to go considering the still tremendous imbalance between the sexes in higher governmental positions, however, the momentum is certainly building for further gains on the political front.

Alas, if only the gender gap would narrow faster when it comes to women and financial security, most notably their retirement savings.

According to the recently released “Pulse of the American Retiree” study from Prudential, women face acute retirement challenges with less than a third the median savings of men.

As for the contributing factors to this worrying savings shortfall for women, Caroline Feeney, CEO of US businesses at Prudential Financial, points to the gender pay gap in America where women today still earn roughly about $0.80 cents to the dollar compared to men. She adds that women are also nearly three times as likely to delay retirement due to caregiving duties. And when it comes to investing for retirement, Feeney says women tend to be more conservative in their approach, thus hampering long-term performance.

“And then you still have women living longer than men on average by six years,” said Feeney. “So if you pull all that together, it does make it fundamentally more challenging for women. They have less savings to start with and they just have a longer time horizon to fund.” 

Elsewhere, Audrey Drossner, founding member of Oracle Private Wealth, says many women feel less financially secure because they often spend time out of the workforce to raise families, which can lead to lower pay and fewer working years, resulting in smaller 401k balances.

“Since women generally live longer, they may need to work longer as well. I recommend that women plan for extended careers, seek financial education to avoid depleting their principal, and make withdrawals at sustainable rates,” said Drossner.

Added Drossner: “It's also essential for women to have a well-planned retirement budget in place to set themselves up for success. By doing so, they can navigate their retirement years with confidence. It's crucial for women to take these steps to ensure long-term financial security.”

Paula Nangle, president & senior wealth advisor of Marshall Financial, says women’s lack of security about their retirement savings strategies is most often due to a deficit of education. Many times, in her experience, that lack of knowledge is because they are now on their own due to death or divorce.

“When I encounter this, I find that investing time in educating them about how an investment plan works to help support their life goals, they feel much more confident. It helps to have a trusted thinking partner to help you make financial decisions,” said Nangle.

Shari Moxley, CEO & founder at Investor’s Resource, says female insecurity over retirement could be generational because men still tend to be the major breadwinners in American households while women are more often caregivers. However, she believes that the increase in working women who are now earning the same or more than their male counterparts should cause younger females to feel better about their financial prowess in the future.

“When you look at a complete picture of retirement, really you need 3 plans: One to live, one to die and one to linger,” said Moxley. “Those last two are where one attempts to plan for contingencies – of which there are a ton. Those contingencies reinforce that life just isn’t as simple as save, invest, and draw an income one day.”

Finally, Daniel Lash, certified financial planner at VLP Financial Advisors, says men tend to be “overconfident” about their investing prowess, while women are more honest. As a result, they appear to be less secure than men about retirement. 

“As an advisor, helping women to feel more confident about retirement in my opinion is about creating a retirement plan with their various spending goals, reviewing the plan regularly with the client to illustrate that the plan will work and with conservative assumptions about the future for both spending and investment growth,” said Lash.