TL;DR: Women face a persistent retirement savings. Discover how income inequality, career interruptions, and longer lifespans affect women’s ability to retire comfortably—and what steps they can take to close the gap.
Main points:
- Understand the causes: Learn how lower pay, caregiving breaks, and limited access to employer plans reduce women’s lifetime savings.
- Social Security shortfalls: Discover why lower lifetime earnings mean smaller benefits and increased financial strain in later years.
- Challenges for single and divorced women: Explore how living on one income or dividing assets can impact retirement readiness.
- Smart saving strategies: Find out how to start early, maximize employer or alternative plans, and invest for long-term growth.
- Professional guidance: See how financial advisors can help women create personalized, confident retirement plans.
Women and the retirement savings gap remain a major financial challenge. Research shows that women save for retirement less than men, often due to lower earnings, career breaks, and limited access to employer plans. Longer life expectancy adds pressure, stretching smaller savings over more years.
The gender retirement gap also reflects differences in confidence and financial literacy. Many women underestimate how much they’ll need in retirement or rely too heavily on Social Security benefits, which may not fully cover living costs. This article explores the main causes, challenges for single and divorced women, and practical steps to build lasting security.
The Root Causes of the Gender Retirement Gap
The gender retirement gap develops over time. It reflects income inequality, career interruptions, and unequal access to benefits. All of these reduce a woman’s ability to save and invest consistently.
1. Income Inequality and the Pay Gap
Women still earn less than men on average. Lower pay means smaller retirement plan contributions and reduced Social Security benefits later in life. Even modest income gaps early in a career can compound into significant shortfalls by retirement.
2. Career Breaks for Caregiving
Many women leave the workforce to care for children or elderly family members. These breaks slow career growth, interrupt contributions, and lower total lifetime earnings. Missing even a few years of savings can have lasting effects.
3. Limited Access to Employer Benefits
Women are more likely to hold part-time or lower-wage jobs that don’t offer employer-sponsored retirement plans. Without automatic payroll deductions, saving requires more discipline and often gets postponed.
4. Longevity and Financial Strain
Women tend to live longer than men, which means they need more years of income. Smaller savings must stretch further, increasing the risk of financial hardship in later life. According to the US Department of Labor, a woman retired at age 67 can live another 20 years. This is over 2 years longer than a man of the same age.
Women and Social Security Benefits
Women use social security benefits to compensate for the retirement gap, but if often isn’t enough.
1. Lower Lifetime Earnings Mean Smaller Benefits
Women usually earn less and spend fewer years in full-time work. This results in lower average earnings and, in turn, smaller monthly Social Security payments. Even small income gaps during working years can make a big difference over time.
2. Impact of Career Gaps
Years spent out of the workforce for caregiving often replace higher-earning years with zeros in Social Security’s benefit formula. This can further reduce retirement income, especially for single women who don’t have access to spousal benefits.
3. Longevity and Income Security
Because women live longer, women’s retirement savings and benefits must stretch further. Many underestimate how long they’ll need to rely on this income. Without other sources of savings, the risk of running out of money increases.
Retirement Challenges for Single and Divorced Women
Single and divorced women face additional financial pressures that make saving for retirement even harder.
1. Living on One Income
Single women must manage all expenses alone, leaving less room for long-term savings. Many earn less, which limits contributions to retirement accounts and Social Security. Unexpected expenses can also derail progress.
2. Divorce and Divided Assets
Divorce often means splitting retirement funds and taking on new costs. Women may lose access to a former spouse’s retirement plan or insurance, forcing them to rebuild savings at a later stage.
3. Longer Life Expectancy
Living longer can be both a blessing and a financial burden. Without a partner to share expenses or care costs, women must plan for extended financial independence.
Smart Retirement Strategies for Single Women
Closing the retirement savings gap starts with practical steps that improve financial security at every stage of life. Women can build stronger retirements by focusing on consistent saving, smart investing, and informed decision-making.
1. Start Early and Stay Consistent
Time is one of the biggest advantages in investing. Even small, regular contributions to a retirement savings plan can grow significantly through compounding. Automating contributions helps maintain consistency and reduces the temptation to skip months.
Women age 50 and older can make catch-up contributions to boost savings. This is especially useful for those who took career breaks or started saving later.
2. Maximize Employer Plans and Find Alternatives
If an employer offers a 401k or similar plan, contribute enough to receive the full match. For those without access, open an IRA and set up automatic deposits. Every dollar saved today creates more income for tomorrow.
Millions of part-time and lower-wage workers, many of them women, lack access to employer-sponsored retirement plans. In those cases, you need to find alternative avenues to build retirement income like annuities.
3. Rebuild Retirement Savings After a Divorce
For divorced women, retirement savings requires clear steps and renewed focus. After a divorce, you should review all retirement accounts and ensure assets are divided correctly (using a QDRO if necessary.)
Check eligibility for Social Security divorced-spouse benefits if the marriage lasted 10 years or more. Roll over or open new accounts in your own name to take full control of investments. Update beneficiaries and adjust savings goals to match your new financial reality.
4. Invest for Growth
Diversify across stocks, bonds, and mutual funds based on age, risk tolerance, and goals. Avoid being overly conservative. A balanced portfolio can help counter inflation and longer life expectancy. Diversification in wealth management allows you to make your money work for you and fill gaps in your current financial plans.
5. Seek Professional Advice
A trusted financial advisor can help tailor a plan to personal needs, whether for single women, divorced women, or those nearing retirement. Good advice ensures strategies stay aligned with income, lifestyle, and long-term goals. Many women tend to feel less confident about investing, but this is changing as more women are actively seeking financial independence.
Empowering Women to Close the Gap
Closing the retirement savings gap starts with awareness and action. Women can strengthen their financial futures by saving early, investing wisely, and planning for life changes like divorce or career breaks.
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Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.
