Addressing the Retirement Savings Struggles of Women

Plan design and other strategies can help women catch up to the retirement savings of men.

As progressive, societal reforms are implemented every day, one issue seems to remain a constant in our modern world: the gender pay gap.

While the wage difference is tightening in each passing year, women still need to shell out more of their checks than their male colleagues—all just to accumulate an equal amount of savings.

But, why?

According to the NerdWallet report, “Pay Gap Closing but Women May Face Retirement Shortfall,” the problem behind the gap isn’t necessarily due to gender, but instead, the higher chance men have in gaining upper management positions, and as a result, earning more than their women colleagues. Life factors that lead to career breaks, including women aiding as caregivers and requesting maternity leave, serve as influences to this shortfall.

“When you add that to the fact that women are living longer than men on average, and then also taking career breaks to raise children or to care for family members, elderly parents and things like that, all of those add up a retirement savings gap,” says Arielle O’Shea, investing and retirement specialist at NerdWallet.

In order to combat these challenges head on, Transamerica Center for Retirement Studies released a study on “Seventeen Facts About Women’s Retirement Outlook…and Eight Steps to Improve It,” listing statistics that add to the wage barrier. Survey findings were selected from their annual Retirement Study of American Workers.

Facts presented included figures on women understanding retirement-based information, the future of Social Security, and 401(k) and other benefit options for part-time workers, among others. 

According to the report, while 68% of women are offered a 401(k) or other type of employee-funded plan, 26% of women surveyed are part-time workers, and therefore, less likely to obtain workplace benefits.

“Women are more likely to work part-time than men, and as we all know, part-time workers are less likely to have success in retirement benefits,” says Catherine Collinson, president of Transamerica. To combat this, Collinson says plan sponsors may look to expanding eligibility for part-time women workers, instead of solely offering the benefit to full-timers. “If there is any way to extend eligibility to their part-time workers, that could be very helpful to women,” she says.

NEXT: Making savings easier for women

For those with little familiarity in retirement planning, Collinson suggests implementing convenient features such as online retirement calculators and auto-escalation; and adding a once-a-year event during the benefits enrollment season. According to the report, 57% of women believe simpler advice would aid significantly in encouraging them to learn more about retirement.

“Part of the challenge of saving is having funds available to save, but another is sometimes it can be really complicated with all the paperwork, and the more convenient we can make it for people to save, the more likely they will save,” she says.

In benefits enrollment season, which is generally during the fourth quarter, Collinson advises sponsors to tailor educational materials and outreach towards women.

“To encourage people or to just work it in the process, where people just calculate the overall enrollment, calculate their savings goals, determine if they’re on track for their retirement, and if not, possibly increase their contributions to the plan, [and] revisit their asset allocation,” says Collinson. “We see this among other demographics as well, the more a message resonates through a communications strategy, the more reliable it is.”

What was once guaranteed income may not be so guaranteed anymore, and yet 27% of survey respondents in the Transamerica study expect to rely on Social Security once retirement approaches. With talks of reformation, plan sponsors and advisers should highly instruct participants to save, Collinson notes.

“Knowing that reforms are probably going to happen, it makes it all the more important for us to be saving,” she says. 

NEXT: Paying Women a Fair Amount


While retirement planning features aid participants considerably in saving for later years, O’Shea, investment and retirement specialist for NerdWallet, notes that a sponsor’s main priority should always be equal and fair pay.

“Auto-escalation and contribution is great for all workers, but that’s not going to help women if they’re being paid a lower salary than men,” she says.

In addition to plan features, O’Shea recommends sponsors consistently reevaluate salaries and debate whether they are reasonable, regardless of gender. For those struggling to apply an equal pay plan design, O’Shea urges sponsors to seek help from consultants.

“It sounds sort of obvious,” she says. “But that’s the first thing you can do because that will go a long way to close the retirement savings gap. It’s a worthwhile investment.”