What prevents women from saving and what they can do about it (2023)

You will not achieve any of your financial goals without saving money. Saving plays a crucial role in everything from home ownership to easy retirement, which is whyPesquisa do New York Life's Wealth Watch 2023it's so disturbing. It found that in 2022, women saved an average of just $3,146 per year, compared to $7,007 saved by men.

While the data may be new, the fact that women earn less (and therefore save less) than men will not surprise many people. But the report is a good reminder of what the odds are for women when it comes to keeping a good chunk of savings, and it offers an opportunity to examine individual steps you can take to make the most of an unfair one to make world.

Why do women save less than men?

One of the main reasons women save less than men is that they have less money to save. After 2021 data from theUS Census Bureau, women earned on average 84% of what men earned (when looking at the average wage for full-time jobs). The reasons for the discrepancy in income and savings between men and women are systemic and complex, howeverCNBC selectionTalk toKathryn Anne Edwards, economist and independent public policy consultant, and Kaitlin Walsh-Epstein, marketing director of the student loan companylaurel path, on some specific obstacles faced by women trying to save.

Women pay a higher price to become mothers

On average, women take a big hit in their income after having children, this is known as "maternal mercy.” A study conducted byStatistics OfficeThe researchers found that the income gap for opposite-sex couples doubles after the birth of their first child, with women earning $25,100 less than men on average.

Also, many employers do not yet offer paid parental leave, but newborns need 24-hour care. In accordance withWorld Economic Forum, only 35% of organizations in the US offered paid maternity leave in 2022 (a staggering decrease from the 53% of organizations offering the benefit in 2020). "There are all sorts of decisions a family has to make regarding the budget and logistical requirements of childcare," says Edwards. "Women who have children tend to be pushed out of the workforce because of their reproductive needs."

Cutting their jobs to support their families means women don't contribute to 401(k) accounts and savings. Furthermore, according to a study, 32% of women who leave the labor market to look after young children never return to the labor marketChamber of Commerce in the United States.

This means the time these women spend actively contributing to employer-sponsored retirement accounts such as 401(k) or 403(b) is significantly reduced. and why do you needearn an incomecontribute toindividual retirement accounts(IRA's) means that only a woman's partner can contribute to her own accounts unless they open a marital IRA.

Women have to finance a longer retirement with less money

Data fromPopulation Reference Officefound that women in developed and underdeveloped countries live longer than men. In developed societies like the United States, women are expected to live to the age of 79, while men live to around 72.

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That seven-year gap means women have to save a little more than men to fund the final chapter of their golden years. Even for someone spending a modest $40,000 a year in retirement, that's an extra $280,000 for the past seven years.

Unfortunately, on average, women saved about 30% less money when they retired than men, according to a study byTIAA Institutefound. One way to reduce the risk of surviving your retirement savings is to put more into your retirement savings when you're younger. But here, once again, the pay gap is undermining women's efforts.

"If you're getting 84% of the dollar, your 6% contribution to your 401(k) doesn't go as far as your male colleague's 6% contribution," says Walsh-Epstein. "The pay gap is systemic, but it continues to widen when you think about women's pensions."

This means women have to deposit more of their paychecks into their 401(k) accounts to keep increasing their retirement dollars or find a way to lower their expected retirement expenses.

Women have more student debt than men

A reportby the Education Data Initiative found that women with bachelor's degrees borrow 4.27% more than their male peers (the contrast is greater among associate degree holders, with women borrowing 24.9% more than their male peers). % more than men). Larger student loan balances generally mean a higher minimum monthly payment over the same standard 10-year payment horizon.

In general, women are also more likely to take on student debt. discoveries ofAmerican Association of University Womenshow that 41% of college women are in debt compared to just 35% of college men.

"Women are more likely to go to college, so they're more likely to enter the workforce with debt," says Edwards. "As a result, they should have higher incomes - that's the expectation, but the labor market isn't as well organized and women's ability to make money has many limitations that we don't see to the same extent in men. "

How to regain financial security

Both Edwards and Walsh-Epstein recognize that many factors associated with lower women's saving rates and incomes are systemic. There's a lot people can do to improve their economic mobility, but employers have tremendous influence over work systems that make it easier (or harder) for women to achieve their financial goals. When navigating the workplace, women can better help themselves if they consider the following.

Be sure to consider your compensation package before starting a new job

One important step women can take to increase their long-term savings is to ensure employers offer them a compensation package that meets their needs.

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"It's important to work for an employer that recognizes your contributions and it shows on your paycheck," says Walsh-Epstein. “Sometimes it's easier if you negotiate in advance. Don't settle for the first number and remember to look at the big picture. Look for benefits or work-life balance.”

Don't just ask about your salary, ask about your team's bonus structure. And if you're planning on having kids in the near future, be sure to find out what the company offers in terms of paid parental leave, childcare and reimbursement, and other parenting programs.

Increase 401(k) posts when it makes sense

Contribute more to your 401(k).It's an easy way to save more money. If you plan on having children someday, take the opportunity to maximize your employer's matching contribution and contribute as much extra money to your 401(k) as possible sooner rather than later. The earlier you start doing this, the more you can benefit from itcompound interest makes.

There may be instances when you want to use that extra money for other big goals such as: B. for buying a house. In this case, you need to weigh the trade-offs so you can make the decision that best suits your needs.

"Compound interest is an effective way to increase your savings and investments, but you also need to understand what your goals are," says Walsh-Epstein. "So if you're saving for a home purchase in the near future, you might not want to increase your 401(k) contributions. You are better off spending those extra dollars on your home purchase.”

It's also important to have oneemergency fundwhich can cover unexpected expenses, especially after having children, as your living expenses are higher. After you've saved at least a month's worth of expenses, you're less likely to have to hack into your 401(k) to pay for a sudden financial crisis.

Work with your spouse to save more

If you can't or don't want to return to the labor market after your children are born, you should talk to your partner about starting a matrimonial IRA so you can still save for retirement. As a rule, you must have an incomecontribute to the IRA, which is an obvious stumbling block for those leaving the workforce to become full-time carers.

With a spouse IRA, you can open oneIRA-Kontoand ask your partner to contribute for you. This allows them to save more money for retirement as a couple, since otherwise their family could save as little as $6,500 a year with a single IRA account; With two IRAs in the family, that means you'll save up to $13,000 a year.

Exhaust other options before accepting student loans

If you're considering higher education, it's a good idea to research free financing options before accepting student loans. Federal scholarships are typically only available to undergraduate students, but you can still check for scholarships and grants directly with your university.

There are hundreds of bags geared towards women that you can find on sites likebecas.comÖnegrita.org. These scholarships were specifically created to help women pay for their education and thus reduce (or avoid entirely) college debt.

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If you work full-time, you should also consider whether your employer offers school attendance as a subsidy or not. Student grants usually help you offset the cost of your studies by refunding part of your tuition fees. This helps make college more affordable and can reduce the amount you need to borrow with student loans.


While women face some disadvantages when it comes to making money and saving, it's more important than ever to engage in personal economic mobility. This means carefully examining the compensation package offered by the employer before accepting a new job: make sure you negotiate your salary, pay attention to the bonus structure offered, and make sure other benefits (like paternity leave) work with your Salary needs to match.

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Editor's note:The opinion, analysis, review, or recommendation expressed in this article is the sole responsibility of the Select editorial team and has not been verified, approved, or otherwise endorsed by any third party.

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