When it comes to participating in a 401(k) plan, 79% of both men and women do so. However, when it comes to saving enough, both men and women fall down on this point, though the outlook for women is bleaker.
An analysis of 3.5 million participants by Aon Hewitt found 83% of women are not saving enough for retirement, compared to 74% of men. Aon Hewitt projects that women will need 11.5 times their final pay to be able to live a dignified retirement, compared to 10.6 times final pay for men. Aon Hewitt discovered a 3.3 times pay gap for women in order to retire at age 65, but a 2.0 times pay gap for men. This means that women will have to work until age 69 in order to have enough to retire adequately.
Women are saving an average of 7.5% of their salary, compared to 8.7% for men. Women have an average account balance of $71,060, compared to $119,150 for men.
Aon Hewitt suggests employers take steps to help
people better prepare themselves for retirement, starting with education about budgeting and debt management, so that they have more money available to set
aside. The firm also suggests that employers adopt target-date funds or managed
accounts and pair that with professional advice. Finally, the firm recommends
using automatic enrollment and escalation at higher rates than what is
currently the norm, such as automatically enrolling people at 6% of their
“Women face significant stumbling blocks when it comes to saving enough for retirement, including longer lifespans, lower salaries and a greater likelihood of taking hardship withdrawals from their 401(k)s,” says Virginia Maguire, director or retirement products and solutions at Aon Hewitt. “Making retirement and financial wellbeing a priority is paramount for overcoming those challenges.”