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Oct. 3, 2019, 10:35 a.m. EDT

Why is it still so hard for women to save for retirement?

Behavior among millennial women is ‘truly troubling’

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By Kerry Hannon


20th Century Fox/Courtesy Everett Collection
The financial fortunes of women haven’t changed much over the years.

Still . When it comes to a discussion of women and money, the word stops me cold.

I’ve been writing about women and money issues for three decades and the concerns, stumbling blocks, and stark reality of a fragile financial future remain virtually unchanged.

That’s frustrating, frightening, but it’s fixable.

“My biggest concern is that women are still lagging their male counterparts men — even millennial women — in retirement savings as well as their income,” Judith Ward, a senior financial planner at T. Rowe Price told me when I spoke to her last week.

We were reviewing recent research from the no-load mutual-fund company that she will be discussing at this week’s Women’s Institute for a Secure Retirement ( WISER ) symposium “What Do Women Really Want? A Secure Retirement and Strategies to Achieve It.”

The largest inequality with income and savings is among working baby boomers who are on the tip of retirement. For working baby boomers, the median deferral rate to contribute to an employer’s 401(k) plan was 7% for boomer women vs. 10% for boomer men, according to the survey.

But, for Ward, it’s the savings behavior among millennial women that is truly troubling. While retirement is decades away for these women, today’s choices considerably impact their future financial security. The median deferral rate for millennial women was 5% vs. 8% for millennial men. “I was surprised,” Ward says.

Only 46% of millennial women report they’re confident in investing, according to a Merrill Lynch/Age Wave report “ Women and Financial Wellness: Beyond the Bottom Line .” And about 63% of women ages 18 to 29 say ‘financial planning is too difficult to even think about,’” says Maddy Dychtwald, co-founder of Age Wave.

That’s got to change. “Millennial women must get started and at least set enough aside to get an employer’s matching funds,” Ward says. Many companies today offer a dollar-for-dollar match for a percentage of their workers’ contributions, up to a specified percentage of pay, typically 4% to 6%.

Aim to save 15% of salary, including an employer match, Ward advises. “When you’re starting out, you probably can’t do all of that, and that’s OK, you can start at a lower amount, and ramp that up over time,” she says. “The greatest asset you have is time. And that compounded growth can really be magic.”

Read: This generation is way behind on saving for retirement. Here’s how they can catch up

Here’s quick refresher on why saving is nonnegotiable for women:

•According to the Pew Research Center, more women (40%) than men (24%) report taking “significant” amount of time off to care for children or family members. Those workplace interruptions cause them to lose possible raises, lower how much they’ll collect from Social Security and gives them fewer years to stash away money in a retirement plan at work (and get contributions matched by their employers).

•On average, women live longer than men in retirement. The average American man will live to age 76, according to the latest data from the Centers for Disease Control and Prevention (CDC), while the average woman in America will live to age 81.

•The pay gap is alive and well. Women still earn less than their male counterparts. In 2018, women earned 85% of what men earned , according to a Pew Research Center. Similar to past trends, the T. Rowe Price study found that millennial women make less money than their male counterparts—a median annual income almost $30,000 less than the median for men.

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