Women are not only finding their voices when it comes to workplace harassment, they are also increasingly crossing the $1 million mark when it comes to money saved in their 401(k). That's according to Fidelity Investments, which recently found that the number of women who have $1 million or more in their tax-advantaged retirement accounts has doubled over the past 12 years.
Fidelity Investments based the analysis on the 15 million 401(k) accounts that the Boston-based financial services company is in charge of. As of the end of September, Fidelity Investments told The New York Times that 20% of 401(k) millionaires were women. That is double the 10% reported at the end of September 2005. "Part of it is that we've seen more women actively participating in 401(k) plans and contributing more," Jeanne Thompson, a senior vice president at Fidelity Investments, told The New York Times in a recent interview. Thompson, who conducted the study for Fidelity, said that there are currently 133,000 individuals on its platform that have hit the $1 million or more mark in their 401(k) accounts.
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Fidelity found that the women who have that much money amassed in their retirement accounts and who make less than $150,000 per year are investing in stocks just like their male counterparts, blowing up the theory that women are more risk-averse than men. Fidelity found that women held around 77% of their savings in stocks, while men held an average of 76% of their savings in stocks. Of those with $1 million or more in their 401(k) that made less than $150,000, women earned $117,000 per year on average, while men earned $118,800 on average.
Men and women had similar returns on their investments and have been saving for an average of around 30 years. Both sexes typically cross the $1 million mark in their 401(k) after turning 50, with women on average reaching the milestone at age 58.5 and men at age 59.3. Thompson said that this is largely because women are saving more than men. Women save 18.1% of their salaries in 401(k) accounts. After adding the average 6.8% employer contribution, women's savings rate stands at 24.9%. Men, on the other hand, save 22.8%, Fidelity found.
While Fidelity Investments found that the number of female 401(k) millionaires is on the rise, separate research shows that single women are still making mistakes that can hurt their investments. Fidelity found that 97% of single women believe it is important to be engaged in managing their money, but a lack of confidence and underestimating their knowledge is holding them back. Fidelity also reported that one in three single women said they are worried about their finances, compared with one in five single men. Single women also worry more than their male counterparts about living comfortably in retirement, paying down debt, saving for the future and being able to pay their bills if they lose their job.
Despite all that, Fidelity found that many single women aren't taking any actions to prepare, with close to half of the single women surveyed, or 48%, saying that they tend to spend without thinking about the long-term impact. Only 28% of single women said that they have a detailed financial plan in place – the lowest of all the demographics. Of those polled, 47% do not have any money put away to cover expenses for three to six months in the event of an emergency. Single women are also less likely to have a will, healthcare proxy and estate plan, noted Fidelity.