Battle of the Sexes: Nest Egg Edition

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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.

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

  • sallybrown12

    I wonder though if it has to do with HOW they invest in their 401K. I suspect women in general are more risk averse so they have a more conservative portfolio and men may have a more aggressive portfolio so they may earn higher returns. Did they look at that at all?