Women typically earn about 77 cents to every dollar earned by their male counterparts—and this gender pay gap shortchanges women even in retirement.
A new "How America Saves" report from Vanguard finds that 73% of women participate in a company 401(k) plan, compared to just 66% of men. The discrepancy is especially striking among those earning $50,000 to $75,000 annually, with 81% of women enrolled in a 401(k) compared to 62% of men. On average, women contribute higher percentages of their income than men to those plans and invest more cautiously.
But women’s superior savings habits don’t translate to a more luxurious retirement lifestyle. Because their salaries are generally lower than men’s, women’s account balances lag behind.
According to Vanguard’s report, women save 7% to 16% more of their income than men. Still, their retirement portfolios come up short: men’s average account balances are about 50% higher than women’s. Last year, the average 401(k) balance for a man was $123,262, while the average for a woman was $79,572.
The report showed overall gains in retirement savings; more Americans participate in 401(k) plans than in the past, partially because more companies are choosing to auto-enroll new employees.
While saving more is good news for any retiree, Vanguard’s findings are also a reminder—particularly for women—that your annual salary will affect your quality of life long after quitting time.
Find out the right way to ask for a raise and more reasons why under-earners pay a high price for not earning what they’re worth.
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