Retirement Savings by Gender

Learn what’s behind the retirement savings gap

Why a Retirement Savings Gender Gap Exists

When it comes to retirement savings, there is a disparity among different genders. For a number of reasons, women have historically socked away less, leading to delayed retirement and longer working years. One big driving force behind the savings disparity is the wage gap. Though it has been improving, women are still only paid an average of 82 cents for every dollar that men make.

There wasn’t any readily available wage comparison data for trans people, including from Social Security. We do know the outlook is also challenging for trans people, who often face even wider wage gaps in comparison to their cisgender counterparts.

In terms of the opportunity gap, a 2016 study found that nonbinary individuals assigned male at birth (AMAB) typically faced hiring discrimination, while those assigned female at birth (AFAB) more often experienced discriminatory treatment within their workplaces. Additionally, nonbinary people as a whole were more likely to have been denied a promotion, though they generally have fared better than transgender women. A 2008 study found that the average earnings for transgender women fell by approximately 32% after transitioning.

All these differences turn into a self-fulfilling prophecy when it comes to retirement savings. Lower wages mean there’s less left over to save. Women are also more likely to have gaps in employment for taking time away from careers to have a child or care for a relative, leading to a cut in wages when it comes to calculating Social Security. On average, men collected $1,627 per month in Social Security in 2018, versus $1,297 per month for women.

There isn’t any current hard data readily available to make accurate wage and savings estimates for nonbinary members of the trans community. Anecdotally, one study suggested nonbinary workers could face challenges getting ahead at work, which would have a domino effect on earnings and retirement savings.

Key Takeaways

  • Cisgender men typically earn more than all other genders in the workplace.
  • Transgender women typically earn the least in the workplace.
  • Cisgender women and trans people can have career gaps due to taking on caregiver roles that can lead to lower lifetime wages and lower Social Security.
  • A lack of financial and educational opportunities leads to lower financial literacy among some cis women and trans people, resulting in delayed retirement savings plans.
  • Improving access to financial education will help improve savings across genders.
  • Continuing to close the wage gap and potential policy changes could help bolster savings potential.

The Root Cause of the Retirement Savings Gap

Aside from wage disparities among different genders, the other contributor to retirement is Social Security, and that’s another area where women tend to fall short. Two main reasons for this shortfall include having a child and/or taking time off to care for a family member.

The Brookings Institution research has found that having a child reduces a woman’s Social Security payout by 16%, and taking time off to care for an elderly relative can cut lifetime earnings by $131,000. Consider this: According to a 2016 National Institute on Retirement Security study, women caregivers under 50 wind up with 30% less in retirement savings compared to male caregivers under 50, who see their retirement savings shrink by 14%.

Meanwhile, the COVID-19 pandemic has thrown an even bigger wrench into retirement savings planning, with some 4 million Americans out of work for six months or longer. Women have sustained more damage than men. In December alone, women accounted for 156,000 job losses, while men actually gained 16,000 jobs, according to calculations by the National Women’s Law Center based on the U.S. Bureau of Labor Statistics December 2020 Employment Situation Summary.

The impact has been felt even more deeply by transgender people, 19% of whom have lost their jobs due to the pandemic. The number rises to 26% for transgender people of color, and 54% of transgender people have had their hours reduced due to COVID-19.

Some workers have even been forced into early retirement, regardless of gender. These painful realities will likely be felt for years to come.

A Deeper Dive Into the Gender Retirement Savings Gap

There are three main reasons why the retirement savings gap has persisted: financial literacy, ongoing wage gaps, and total years worked.

Financial literacy

Knowledge is power, and never has that been truer than when it comes to retirement savings. Women lag behind men in financial literacy, according to a 2020 report from the Global Financial Literacy Excellence Center. The reasons for this include feeling uncomfortable when talking about money and not knowing where to go to be better informed. Additionally, financial planning and investment advising have generally been skewed more toward men.

Wage gap

It’s a vicious cycle. Though the wage gap is narrowing, as noted above, women still only earn about 82 cents for every dollar a man makes. And lower wages translate to lower savings, which impacts how much will be available in retirement.

That said, transgender individuals may face wage and opportunity gaps regardless of their gender identity. A 2011 report from the National LGBTQ Task Force found that 15% of transgender persons had a household income of less than $10,000, which equates to a poverty rate nearly four times higher than that of the general population at the time.

Total years worked

Other factors that contribute to the gender retirement savings gap can include the type of work (e.g., part time) and time away from work to have a child or care for an elderly relative. Both impact the amount of money that could contribute to retirement savings, either through a company-sponsored plan, an individual investing plan, or Social Security. All will impact the amount of retirement savings, regardless of gender.

How to Narrow the Gender Retirement Savings Gap

So now that we know there’s a gap and why it exists, how can it be fixed? It starts with financial literacy. Without the knowledge of how and why to save, it can be an uphill battle to even get started.

What can be done? For one thing, start early. You’re never too young to learn about money and saving. There’s a wealth of information out there to help anyone interested in getting their savings plan started or keeping it on track.

Many experts have created platforms specifically for those who have faced a dearth of information. For those who are uncomfortable even thinking about money, much less talking about it, there are also ways to break that cycle. Research by the American Psychological Association, as reported by Science Daily, has shown that looking toward the future can be one way to help rein in those impulsive spending habits.

For those who take time off to have a child or to care for a relative—and those who work part time at jobs that don’t offer savings plans—there are changes at the policy level that could help. One way is to create a paid family leave act at the federal level. Though the Family and Medical Leave Act provides workers with 12 weeks of unpaid leave, only eight states and the District of Columbia have any paid leave policies in place.

And though the wage gap has narrowed, it will likely require some major policy changes to really move that needle. One country did just that. As reported in the Harvard Business Review, in 2018, Iceland began requiring companies with 25 employees or more to report that they pay the same wages for men and women or face daily fines. There is also hope on the horizon with the new administration in the White House. President Biden has outlined an ambitious plan for how he intends to tackle some of these financial disparities, starting with the creation of the White House Council on Gender Equality.

Article Sources
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  11. National Women’s Law Center. "All of the Jobs Lost in December Were Women’s Jobs."

  12. Human Rights Campaign and PSB Research. “The Economic Impact of COVID-19 Intensifies for Transgender and LGBTQ Communities of Color,” Page 2.

  13. The New School Schwartz Center for Economic Policy Analysis. “Older Workers Report.”

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