Women are taking control of their financial lives like never before.

They’re paying their bills and following a budget. They’re chipping away at their debt, building their emergency funds and saving money for retirement.

There’s just one issue: They’re still investing less in their future selves than men are today and could be losing out on hundreds of thousands of dollars over their lifetime as a result.

More than a quarter of women (26 percent) working full-time, part-time or looking for employment haven’t contributed to their retirement savings over the last year, compared to 19 percent of working men, according to a September Bankrate poll. The percentage of Black and Hispanic working women who aren’t putting money away for retirement is even higher (29 percent).

The reasons why the gap persists aren’t as clear-cut. While the gender pay gap is part of the problem, research also suggests women feel misunderstood in the financial world, which may be driving their behavior. Generally, women are more likely to keep more of their savings in cash, less likely to invest than men and report lower confidence in their investment knowledge.

Women feel that they can and should be saving more for retirement and they don’t feel like they’re taking enough action. We’re making progress, but there’s still a long way to go.

— Lorna KapustaHead of Women and Engagement at Fidelity Investments

Key takeaways

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  • Women are saving more than ever for retirement: Nearly 3 in 4 working women (74 percent) are contributing to their retirement savings, a four percentage point increase over the past three years, according to Bankrate data. In 2020, 70 percent of working women contributed to their retirement savings.
  • Despite progress, there’s still a gender gap in retirement savings: More than a quarter of working women (26 percent) indicated they aren’t contributing to retirement. Of working women contributing to retirement, 30 percent don’t know much they need to retire comfortably. Fewer working men (19 percent) say they aren’t contributing to their retirement and 20 percent don’t know how much they need to retire comfortably.
  • Most women don’t feel confident about their retirement savings: Nearly 6 in 10 working women (57 percent) feel behind on their retirement savings, down from 62 percent a year ago.

Women have historically invested less for retirement, but that’s changing

Financial experts seem to agree on one thing: The investment industry needs to evolve faster to meet women where they are. Historically, Kapust says the industry has been a boy’s club — built for more of a “male trader mindset.”

“The industry has made it more complex than it needs to be when it comes to investing,” she says. “It starts with the fact that the language the investing industry has historically used is full of jargon.”

While the investment industry has historically catered to men, Kapusta says many retirement providers have started making a conscious effort to make retirement accounts and investing resources more accessible for women. And more importantly, they’re trying to engage more women with their retirement accounts and investments. Today, you can invest online with as little as a dollar, and it costs little to no money to do it from the comfort of your home.

“Women work so hard for their money and are also so afraid of losing it that they demand more from the industry to make it [investing] as easy as possible,” Kapusta says.

Retirement providers’ efforts seem to be working: There are more women investing for retirement than ever before. In the last three years alone, the percentage of women in the workforce contributing to their retirement savings has slowly ticked up. In 2020, a Bankrate survey found that 70 percent of working women contributed to their retirement savings. By 2023, that figure was up to 74 percent. Fidelity Investments, the nation’s largest 401(k) plan provider, added 48 percent more new women customers in 2023 compared to 2019, with younger women leading the way.

Despite that progress, more women than men are not saving for retirement. Over a quarter of working women (26 percent) haven’t contributed to their retirement savings over the past year, compared to 19 percent of working men. Even when working women put money away for retirement, 30 percent say they don’t know much they need to retire comfortably, compared to 20 percent of men.

Women can miss out on hundreds of thousands of dollars when they don’t invest

Another reason women may not be as aggressive as men when it comes to investing is that they like to hang on to their cash, explains Emily Green, head of private wealth management at Ellevest. The average woman keeps 70 cents of every dollar in cash, according to Green.

“That costs the average woman hundreds of thousands because they are not investing and getting that compound interest,” Green says. “Those are real numbers.”

The chart below shows the difference in average returns over 40 years when you invest in the S&P 500, compared to stuffing money under a mattress or putting money in a savings account. The varying monthly contribution amounts show how much you stand to gain over a 40-year period across those different saving strategies.

Stashing $100 in a savings account every month instead of investing it over 40 years in the S&P 500 equates to leaving as much as $500,000 on the table, assuming an annual 10 percent rate of return. The stakes increase for women who can put more money away. If a 25-year-old has the means to invest $500 every month in the S&P 500 but chooses not to, she could miss out on earning an average of $2.5 million over a 40-year period, assuming an annual 10 percent rate of return.

Women have struggled more with retirement savings amid high inflation

Many Americans of all ages struggled to save for retirement last year when inflation peaked at 9.1 percent, a 40-year high. But Bankrate data reveals that women struggled more to contribute to their retirement savings last year than men because of elevated inflation.

In a Bankrate survey, 58 percent of female workers who contributed the same or less to their retirement savings last year said high inflation made it harder for them to save more for retirement, while only 51 percent of male workers said the same. Data suggests that inflation hurts women’s wallets more because they have less earnings, savings and wealth than men.

“That’s a reflection of a lot of things going on in the world right now. Think about inflation — that definitely affects women and how they think about their money,” says Green. “But these days, with inflation where it is, you’re losing purchasing power if you aren’t investing.”

Women feel less confident about retirement planning — why that’s a problem

Research shows women are better investors than men, which begs the question: Why are a quarter of working women leaving free money on the table?

Experts point to the gender confidence gap in investing. Men are far more comfortable investing for their retirement savings than women, according to a May Federal Reserve survey. Generally, men tend to be overconfident investors, whereas women generally are more risk-aware and tend to hold onto their investments, according to Green.

“They want to understand the risk that they’re taking and take a calculated risk — not that they don’t want to take any risk,” she says.

That makes women better long-term investors, but it can also prevent them from taking action if they don’t have all the information in front of them to make financial decisions, says Cady North, founder and CEO of North Financial Advisors, which specializes in helping women meet their financial goals.

“They end up not making any action, which can be really detrimental versus making mistakes along the way,” North says.

Bankrate data suggests that most working women don’t feel on track with their retirement savings in 2023. Nearly 6 in 10 working women (57 percent) feel behind where they should be with regard to their retirement savings, with 39 percent feeling significantly behind where they should be.

That’s an improvement from last year when 62 percent of working women said they felt behind where they should be. But men continue to report feeling on track or ahead with their retirement savings at higher levels: 39 percent of men say they are right on track, slightly ahead or significantly ahead, compared to 35 percent of women. Nearly eight percent of working women don’t know whether they’re on track with their retirement savings, compared to five percent of men.

4 ways that women can take action to start building wealth

Women have different financial needs from men and have to plan differently for their future selves. To help reduce these stressors and make the most of their money, here are four ways women can take action to build long-term wealth:

1. Get familiar with investing basics

You don’t have to be an investing pro to get started. North says women will often have an ‘all-or-nothing’ perspective with investing, but she wants women to know they can learn by taking a piecemeal approach.

North suggests setting aside an hour a week for financial education, where you try to learn one new thing with regard to investing. Take advantage of free online resources to learn about different investment account options and investing basics, such as a diversified investment portfolio and your risk tolerance.

Once you’ve learned the basics, choose a retirement account to start investing.

2. Take advantage of free retirement accounts

Experts say one of the easiest, most effective ways to start investing is with a 401(k) plan offered through an employer. Many employer-sponsored plans include a 401(k) match, meaning that if you contribute your pre-tax wages, your employer will match your contributions up to a certain percentage. That’s essentially free money on the table for your future self.

“Focus on learning about what your employer offers in the way of investing for retirement,” North says. “That should be your No. 1 focus because if you aren’t investing yet, you’re likely leaving money on the table by not getting that employer match.”

If you can’t access a 401(k) plan, other free options like IRA accounts are available. A traditional IRA allows you to contribute pre-tax money earned through income, but a Roth IRA works a little differently. With a Roth IRA, you can only contribute after-tax dollars and there are income limits. If you like the idea of opening a traditional IRA or Roth IRA, look for a retirement provider with low fees.

3. Start investing early, even if it’s just a little bit

If there’s one piece of advice that several investing experts agree on, it’s this: Don’t try to time the market and start investing as soon as possible — even if it’s just a few dollars a week.

Financial experts recommend putting a portion of your paycheck into a retirement account and increasing your contributions over time as you establish a more regular habit of investing. If you have access to a 401(k) plan, contribute enough to grab your employer’s match and increase your contributions by one or two percent each year.

Taking your first step toward saving and investing, no matter how small it may seem, can lead to more financial “options and opportunities” down the road, according to North.

“You have the option to take a work break for whatever reason,” she says. “Opportunity in that you could retire early; you could start a business or you could do something different that’s not so beholden or traditional in the workforce.”

4. Have a long-term mindset and plan for a longer retirement

Women, on average, live six years longer than men and, as a result, their dollars need to stretch further to cover a longer retirement. Given their longer lifespans, women have additional healthcare costs to consider during retirement, estimated to be $165,000 on average, according to Fidelity Investments. That’s why it’s important for women to create an investment strategy that matches their risk tolerance, timeline and long-term goals early on. Experts recommend spreading your investment portfolio across various assets to hedge your bets and boost the odds of higher returns over time.

  • Bankrate.com commissioned YouGov Plc to conduct the retirement savings survey in 2023. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,527 US adults, of whom 1,301 are working full-time, part-time or temporarily unemployed. Fieldwork was undertaken between August 23-25, 2023. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+). The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

    Bankrate.com commissioned YouGov Plc to conduct the retirement savings survey in 2022. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,312 US adults/ Fieldwork was undertaken between September 21-23, 2022. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+). The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

    Bankrate.com commissioned YouGov Plc to conduct the retirement savings survey in 2021. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,225 US adults. Fieldwork was undertaken between October 20-22, 2021. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+). The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

    Bankrate.com commissioned YouGov Plc to conduct the retirement savings survey in 2020. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,407 US adults, of whom 1,331 were working full-time, part-time or temporarily unemployed. Fieldwork was undertaken between May 13-15, 2020. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+). The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.