Why Retirement Is a Bigger Challenge for Women

It’s expensive to be female. First, there’s the wage gap — which is still decades away from being rectified. This leads to women saving less for retirement than men, and having lower retirement account balances. 

Men simply make, on average, more than women. But there’s another factor that puts women further behind, according to a recent article from AARP. Parenthood. 

Women tend to dedicate more of their time to caregiving than men, and they generally take off significant time from work to do so. (This is also the case when taking care of aging parents.)

This means more than just income loss — women who step away from the workplace also give up contributing to a retirement plan (and the employer match), AARP says. It also results in reduced Social Security benefits. 

About a third of women (32.6%) also say they never learned about saving for retirement, according to separate research by TIAA and Emily Oster, an author and professor of economics.

Here’s what survey respondents in Oster’s study said about their financial situations:

• 49% said they had no money left to set aside after meeting their monthly expenses
• 54% said they’d turn down a higher-paying job if it meant paying more for child care

For more on the gender gap in retirement savings, see Pete Grieve’s story.

— Jill Cornfield, deputy editor

Every month, more than 5 million people leave their jobs. Of those with a 401(k), about 41% drain their retirement accounts to make ends meet while they look for a new one, according to a recent study. Problem is, no one tells you what a terrible idea it is to take the money out years before retirement, says John G. Lynch Jr., a professor at the University of Colorado’s Leeds School of Business. Withdrawing those hard-earned contributions can affect your finances in the long term as well as the short (you’ll have to pay taxes and a penalty if you're under 59-½).

TL;DR; Your 401(k) is not a windfall. Roll it over or leave it where it is. 

• Free? Yes. Yours to keep? Maybe not. Here’s what to know about the matching funds in your 401(k).
• A financial advisor analyzes the top things people want in a retirement plan — a combination of safety, protection, income and freedom — and how to secure them. (Podcast)
• Are you too heavy on stocks? Here’s what the experts say you should know about diversifying your portfolio.

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