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The gender gap and retirement

Key takeaways

  • Women need to save differently for retirement.
  • Factors such as longevity, the pay gap, the investing gap, and caregiving can lead to less in retirement savings.

How much money you’ll need in retirement will vary based on factors like what your expenses will be, how much you can save, and how long you’ll be retired. But that’s not all that women have to take into consideration—there is a very real gender gap in retirement. This means that women are more likely to need more money for a longer amount of time.

What's different for women

1. The pay gap

The fact that women are often paid less than men in comparable positions might not be a surprise. But there can be other pay gaps too, specifically for women of color and mothers. And when women are earning less in salary, it snowballs when it comes to retirement—since most people save a percentage of their income each paycheck for retirement. If you're making less, then the total amount you're putting into your retirement is lower. Not only is the contribution amount potentially lower, but over time, there is a likely impact to the potential for compounding growth.

What to consider: If possible, save more for retirement; even 1%–2% more each month can make a difference. Should you be able to max out your 401(k)/403(b) contributions, you can continue to save each year (up to the IRS max) in a separate retirement account such as traditional IRA, Roth IRA, or rollover IRA. However, remember that it's not the percentage that matters as much as making sure you have enough for retirement, so talk to a financial professional about having a plan and tracking toward it.

2. The investing gap

Research shows that women are more likely to keep extra money (meaning anything outside of retirement or an emergency savings) in cash instead of investing.1 Not only is cash missing out on potential growth, but it isn't even keeping up with inflation.

Additionally, the investing gap compounds the pay gap: Women make less, then many are not investing much of what they have—leading to a lower overall net worth.

What to consider: Consider investing above and beyond your retirement account and emergency savings. There are options for every type of investor: hands-off accounts, where an investment manager chooses and manages your investments for you, or hands-on accounts, where you choose and manage your own investments. Many women worry that investing involves too much risk, but there is a broad range of options for every comfort level and timeline.

3. Caregiving

More than 75% of caregivers are women, first for children, then later for ailing parents or a partner.2 This means the associated costs (many of them hidden) are also primarily shouldered by women: When someone leaves the workforce to take care of a loved one, it can lead to lost salary and wages as well as reduced retirement savings (and potential growth), Social Security, health care savings, raises and bonuses, and more.

What to consider: If you leave the workforce, try to keep saving for retirement—you might be eligible to use a spousal IRA (if you're married) or a traditional or Roth IRA (if you have earned income, even if it's part time). If you aren't eligible for a retirement account, consider investing in a nonretirement account.

4. Longevity

On average, women live 5 years longer than men, and 81% of people 85+ are women.3 This ultimately means that women are more likely to be alone in retirement, caring for themselves financially. Longevity can also impact the other aspects of retirement including higher health care costs, the need for a higher Social Security benefit, and how long your savings will need to stretch to cover living expenses.

What to consider: Talk to a financial professional or use a tool like a retirement score calculator to help make sure your retirement plan factors in a longer retirement. This can help you understand if what you're currently saving is on track. Additionally, consider some extra ways to help protect yourself, such as long-term care insurance or guaranteed income.

5. Health care costs

Many people don't account for the cost of health care in their retirement savings, nor do they realize that women are likely to need more.4 Women are also more likely to need full-time care (like a nursing home or assisted living), which can be in the 6 figures yearly. Additionally, many couples spend more money on the first spouse who needs it—statistically men. That often leaves women with less than they need.

What to consider: Plan to save additionally—and separately—for health care costs in retirement. Consider using a health savings account (HSA) if you are enrolled in an HSA-eligible health plan. With an HSA, you can often split your contributions into invested money (which can be long-term savings for health care costs in retirement) and cash (so you can pay for your qualified medical expenses directly from your account). You can get 3 tax benefits for contributions: An initial tax deduction for your contributions, tax-free potential earnings, and tax-free withdrawals when you use the money for qualified medical expenses.5

If you are eligible for an HSA, you cannot elect to set up both an HSA and a flexible spending account (FSA), unless the FSA is a “limited purpose” FSA. Your employer’s HR representative will be able to tell you if this is the case. A limited purpose FSA works like a regular FSA but can be used only for vision care and dental expenses. Just know that the majority of FSA funds are use-it-or-lose-it each year up until retirement after which they’re forfeited—unlike funds in an HSA which always roll over year to year and never expire. So if saving for medical expenses in retirement is your objective, an HSA may fit those needs better.

If you aren't eligible for an HSA, consider saving more in your 401(k)/403(b) or in an additional IRA.

6. Social Security

There is a statistical likelihood that women receive less in Social Security benefits, often related to the pay gap and caregiving (your Social Security benefit is calculated based on your top 35 years of income)—so if you earn less, your Social Security benefit will be less. This lower amount is compounded by the fact that women often retire earlier and live longer than men—so there is often less money for a longer period of time.

What to consider: Make the most of your benefits. Consider waiting until your full retirement age—or, better yet, 70—to boost your annual benefit. If you are married, try to have the higher earner wait as long as possible. Divorced? If you were married for at least 10 years and have not remarried, you may be able to claim your ex-spouse's benefit if it's higher than yours. Since the rules are complicated, consider working with a financial professional.

7. Prioritizing other people

Women are often expected to put family and other loved ones' needs first, even when it comes to money. This can include saving for a child's college ahead of retirement, caregiving, or letting a partner make the majority of investment decisions—more than 1 in 5 women say they have little or no involvement in decisions about retirement and other long-term financial planning.6 Collectively, this can leave women with less in retirement and other assets, particularly over the course of many years.

What to consider: Remember that you have a high likelihood of longevity and being on your own financially, so earmarking enough for yourself is critical. You can always take out loans for a child's school (among other things), but you can't take out loans for retirement.

Any one of these factors might feel incremental, but when combined together over decades, the financial impact can be very real.

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More to explore

1. Fidelity Investments’® 2021 Women and Investing Study. 2. "Aging in America," Institute on Aging, 2018. 3. CDC/National Center for Health Statistics, Life Expectancy Tables, selected years 1900–2016, published 2017 4. Fidelity Investments 22nd annual Retiree Health Care Cost Estimate, June 2023 5. With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. Spending HSA money is tax-free when used to pay for qualified medical expenses. 6. Fidelity 2021 Couples Research, May 2021

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

IMPORTANT: The projections or other information generated by the Planning & Guidance Center's Retirement Analysis regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Your results may vary with each use and over time.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

This information is general in nature and provided for educational purposes only.

The information provided herein is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, you are strongly encouraged to consult your tax advisor before opening an HSA. You are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS website at You can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses, online, or you can call the IRS to request a copy of each at 800-829-3676.

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