A quarter of all working women are leaving free money on the table that could set back their retirement

A larger share of women than men aren’t saving for their future selves and could be losing out on hundreds of thousands of dollars over their lifetime as a result.

More than a quarter of women (26%) working full-time, part-time or looking for employment didn’t contribute to their retirement savings between August 2023 and 2024, compared to 16% of working men, according to Bankrate’s 2024 Retirement Savings Survey. A similar percentage of Black and Hispanic working women (24%) didn’t contribute to their retirement savings during that time, a slight improvement from last year (29%).

The reasons why women save less for retirement aren’t 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, feel less confident about their investment knowledge and report higher levels of financial stress.

Taking action, however, can make the biggest difference in decreasing stress and building financial confidence — and many women said they would make positive financial moves this year. Fidelity research found that 40% of women planned to contribute to an emergency fund and 38% planned to save more for retirement between March and September this year. Thirty-five percent said they would pay down debt and adjust their spending habits during that period, the survey found.

Key takeaways on women’s retirement savings

Nearly 3 in 4 working women (74%) are contributing to their retirement savings, a four percentage-point increase between 2020 and 2024, according to Bankrate’s Retirement Savings Surveys. In 2020, 70% of working women contributed to their retirement savings.

More than a quarter of working women (26%) indicated they didn’t contribute to their retirement savings between August 2023 and 2024, compared to 16% of working men. That’s the same percentage as last year, indicating no improvement year over year.

Nearly 6 in 10 working women (59%) said they felt behind on their retirement savings as of August 2024, up from 57% the prior year. That percentage is higher than working men: 55% feel behind where they should be with their retirement savings.

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

The investment industry is slowly evolving to meet women where they are, but there’s still plenty of room for growth. Because the industry was originally built for more of a “male trader mindset,” Kapusta says many retirement providers have been actively trying to make retirement accounts and investing resources more accessible for women in recent years. More importantly, retirement providers are trying to engage more women with their retirement accounts and investments. Today, you can invest online with as little as a dollar in 401(k) plan, IRA or Roth IRA — and it can cost little to do it online from the comfort of your home.

“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.”

Retirement providers’ efforts seem to be paying off: There are more working women saving 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% of working women contributed to their retirement savings. By August 2024, that figure was up to 74%. Fidelity Investments, the nation’s largest provider of 401(k) plans, added 48% more new women customers in 2023 compared to 2019, with younger women leading the way.

“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.

Despite that progress, there are more working women than men who aren’t saving for retirement and many don’t know much they need to save for retirement. Over a quarter of working women (26%) didn’t contribute to their retirement savings between August 2023 and 2024, compared to 16% of working men. Additionally, 27% say they don’t know how much they need to retire comfortably — compared to 19% 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% 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% rate of return.

Women have struggled more with retirement savings amid high inflation

Many Americans of all ages struggled to save for retirement in 2022 when inflation peaked at 9.1%, a 40-year high. But Bankrate data reveals that women struggled more than men to contribute to their retirement savings at that time than men because of elevated inflation.

In Bankrate’s 2022 Retirement Savings Survey, 58% of female workers who contributed the same or less to their retirement savings said high inflation made it harder for them to save more for retirement, while only 51% of male workers said the same. Other data suggests that inflation hurts women’s wallets more because they have less earnings, savings and wealth than men.

“Inflation definitely affects women and how they think about their money,” says Green. “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 2023 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’s 2024 Retirement Savings Survey found that most working women didn’t feel on track with their retirement savings over the last year. Nearly 6 in 10 working women (59%) felt behind where they should be with regard to their retirement savings as of August 2024, with 38% feeling significantly behind where they should be.

However, that’s an improvement from 2023 when 57% of working women said they felt behind where they should be with their retirement savings. In comparison, 55% of working men feel behind where they should be with their retirement savings, with 33% feeling significantly behind where they should be.

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 1% or 2% 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.

Methodology

Bankrate.com commissioned YouGov Plc to conduct the retirement savings survey in 2024. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,445 U.S. adults, of whom 1,257 are working full-time, part-time or temporarily unemployed. Fieldwork was undertaken between August 19-21, 2024. The survey was carried out online. The figures have been weighted and are representative of all U.S. 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 2023. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,527 U.S. 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 U.S. 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 U.S. 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 U.S. 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 U.S. 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 U.S. 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 U.S. 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 U.S. 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.