Women Are Better Savers Than Men. So Why Do They Retire With Less?

Today marks the very first Women's Retirement Security Day, a new national day of action from the American Retirement Association. Women are running businesses, closing income gaps in certain fields, and taking a bigger role in household financial decisions than at almost any point in the past.

But even as women's financial influence grows, they still retire with about 30% less saved than men, according to the U.S. Department of the Treasury. This isn't the outcome of one bad decision somewhere along the way. It's the accumulated effect of how women's earning, saving, and working lives are structured differently from men's, year after year.

Here's a stat that stops me every time I see it: women are 15% less likely than men to believe their retirement savings are on track. And they're often right to feel that way. Vanguard's newest How America Saves report found men's average 401(k) balance running about a third higher than women's. What makes that gap so interesting is that women, on average, save a larger share of every paycheck and join their employer's plan at higher rates than men do. So this isn't a story about effort. Something else is going on.

Where the gap actually starts

Most retirement plans are built around one idea: steady income, contributed consistently, for decades. That's not the trajectory of most women's careers. Time out of the workforce or reduced employment for pregnancy-related conditions and caregiving — raising kids, caring for a parent — is one of the biggest drivers of the gap, especially since those career interruptions often occur in the early stage of a woman’s career, thereby depriving them of the growth of those investments and every year outside a plan is a year without a match, without contributions, and without compounding growth. Research suggests that even a single year of caregiving, combined with the gender pay gap, can reduce a woman's retirement savings by 24%. Five years can cut it nearly in half. That's not a discipline problem. It's what happens when the infrastructure assumes a life that not many people actually live.

Small businesses and part-time work make it worse, and women are overrepresented in both. Nearly two in three employees at companies with fewer than 50 workers still have no workplace retirement plan at all, according to Georgetown University's Center for Retirement Initiatives. No amount of financial literacy fixes that. You cannot out-save a plan that doesn't exist. And then there's longevity: women live longer, on average, so whatever they do save has to stretch further, usually against higher healthcare costs later in life.

An access problem, not a behavior problem

Most of my job is about the rules that govern how retirement plans get built, adopted, and administered. From that seat, this doesn't look like a behavior gap or about women making bad savings choices. It looks like an access gap, and access gaps get closed by policy and plan design. State auto-IRA programs, solo(k) plans, pooled employer plans, and simplified rules for small businesses to adopt a plan aren't abstract policy wins. They're the legal machinery that decides whether someone has a retirement account and access to the most tax-efficient savings channels in this country to contribute to in the first place.

I see this pattern play out constantly in the plans we administer. A business owner sets up a 401(k), designs it around a fairly standard career trajectory, and never quite accounts for the fact that a meaningful share of the workforce will step away for a stretch—for a baby, for a parent, for an illness, and come back on a full- or part-time basis needing the plan to still work for them. Most plans weren't written with that person in mind, because most plans were written decades ago, by and for a workforce that looked different than it does now.

I also recently read a piece about a woman filling out a job application, typing "retired" for her father's occupation, then pausing before "housewife" for her mother's—because there was no word on the form or in our systems for a woman who worked her whole life without a formal retirement to show for it. That's the part of this I can't shake. Recognition and infrastructure turn out to be the same problem. If the system has no place for how someone actually worked, it won't have a way to help them retire, either.

What we're building toward

We spend a lot of time at Vestwell on plan design and compliance—the unglamorous parts of this problem. When we're deciding how a plan should work, I ask people to picture someone whose income wasn't steady, whose career had a gap in it, who worked twenty hours a week for most of a decade. If the plan doesn't work for her, it isn't finished.

That's why this shapes how we design and administer plans at Vestwell: for careers that aren't straight lines, and for access that doesn't depend on the size of your employer or the shape of your work history. In its first year, Women's Retirement Security Day is a chance to say something plainly: this gap isn't about what women do differently. It's about what the system has made harder for them to do at all and what we can all do to fix it. That's a solvable problem, and it's worth building for, so that saving more doesn’t have to mean retiring with less.

Allison Brecher is General Counsel and Chief Compliance Officer at Vestwell.