The roaring stock market is minting a new crop of 401(k) millionaires, but only half of the population isn’t feeling the gains.
The average woman’s retirement savings dropped from 70 cents for every $1 saved by men to 68 cents in the past year, according to a recent analysis done by LT Trust.
The analysis, which was based on the 401(k)s of 59,000 American workers across all 50 states, found that 78% of men increased their retirement portfolio of stocks while 51% of women did the same. This imbalance, along with the gender pay gap, has far-reaching implications for long-term retirement security.
“The pandemic is exacerbating the already poor condition of women’s future financial security,” said Stacy Miller, a Tampa-based certified financial planner. “It has profoundly affected [jobs in] sectors more commonly filled by women such as hospitality, travel, and education.”
For the average woman to make up the gender pay gap, considering women earn 84% of what men earn, she would have to work an extra 42 days in a year to earn a man’s wage. When stretched over the course of a career, a woman’s lower wages directly impact her ability to save and live comfortably in retirement. Furthermore, women's retirements are statistically based on life expectancies.
Women also have a unique set of tugs and constraints on their time. Since caregiving responsibilities often fall on women, they are more likely to experience extended — or even permanent — breaks from the labor force to raise young children or care for aging relatives, translating to lost earned wages and potential employer retirement contributions.
“This time off means fewer opportunities for contributing to workplace retirement plans like a 401(k), and fewer opportunities for pay raises and promotions,” Miller said. “The unique challenges that women face every day can have a compounding negative effect on their ability to successfully achieve their future financial goals.”
Miller pointed out that during the pandemic, many women downshifted career-wise or stepped away from their professional roles to take on “the bulk of the responsibility” when it came to necessities like supervising remote schooling for children or caring for aging parents.
“Women are often busy managing their careers and their families,” Miller said, calling their perceived lack of interest or competence in personal finance a misconception. “It is often a lack of time and sometimes a lack of confidence... that women often do not make time to manage their own finances and delegate it to their partners."