A new survey by T. Rowe Price finds that gender does matter when it comes to the retirement saving habits of Millennials.
The survey found that the average balance for men participating in 401(k)s was $74,000, while the average balance for women was $38,000. In addition, 68% of the Millennial women surveyed who were eligible to participate in 401(k)s did not.
Analysts say part of the reason could be that women earn less than men. Women with bachelor’s degrees make an average of $50,000 a year, which is the same as the average earnings for a man with an associate degree, according to the Status of Women in the States report.
Financial experts also say that women tend to lack confidence when it comes to making financial choices, and struggle with long standing social messages that they are not as good with money as men.
“I don’t know that the lack of knowledge is so different, but how they handle it is,” says M. Cindy Hounsell, President Women’s Institute for a Secure Retirement. “Men will change their investments. Women tend to stay with the losers and hope they get better,” she adds.
Hounsell also points out that women this age have so many priorities, such as thinking about marriage and children. “A lot of times, saving gets lost in the mix,” she says.
Millennial women should consider the following when thinking about saving for retirement:
- Almost 1 in 4 women are broke within two months of their husband passing
- Women live longer, so they need 20% more for retirement
- Women take off approximately 11 years more from work than men, (to raise children, and care for parents). That means they have less income to apply towards retirement savings
- Less time in the workforce means Social Security benefits are about half that of men’s
- 87% of poverty stricken elderly are women
“They need to make the best decisions early because they are already up against it for retirement. Women are going to take on those caregiving issues for their children and parents…that’s just what’s going to happen. They need to get into good retirement saving habits soon,” says Hounsell.