When it comes to 401(k) savings, women are doing better than men in every way — except their account balances.
That's the conclusion of a recent
The only area where men outpaced them was the one that matters the most: In total, men had 44% more savings in their accounts. According to Vanguard, this had less to do with saving patterns than with income inequality. The men's incomes, on average, were 33% higher than the women's.
"While there are differences between the genders from a retirement standpoint, it has nothing to do with saving behavior or investing behavior or trading behavior," said Dave Stinnett, head of strategic retirement consulting at Vanguard. "Across all of those measures, women are doing absolutely the right thing. The differences are around compensation levels."
In all income brackets, Vanguard found that women enrolled in their jobs' 401(k) plans more than men. Among the lowest-earning workers, making less than $15,000 per year, 50% of women enrolled, compared to just 42% of their male counterparts. In the mid-range — $50,000 to $74,999 — 88% of women participated, compared to 81% of men.
As the salaries grew higher, the gap narrowed. But even among those earning $100,000 to $149,999, there was a difference — 94% of women enrolled in their workplace plans, compared to 90% of men.
In most brackets, women also had slightly higher contribution rates. For all incomes above $30,000, women set aside between 0.1% and 0.3% more of their paychecks for their retirement plans than men did. And this gap did not shrink as salaries increased. Among those making more than $150,000, for example, women contributed 8.1%, compared to 7.8% for men.
Gender income inequality is a persistent problem in the United States. In 2021, women earned 82 cents for every dollar earned by men, the
On an individual level, Stinnett said, some solutions can come from financial advisors. For workers looking to catch up on their retirement savings — whether male or female — wealth managers can point out helpful features in their 401(k)s and help make the best possible use of them.
"There's a huge role for financial advisors to play here," Stinnett said. "You want to make sure that they are involved in that plan, that they are starting off by saving at the full match level … and that they are taking advantage of an automatic escalation feature that allows them to increase their savings by 1% or 2% a year."
For employers and plan sponsors, Vanguard also pointed to another solution: auto-enrollment. The practice of automatically enrolling employees in their retirement plans — and giving them the option to opt out — has been found to
"For plan sponsors who are looking for their retirement plans to be as equitable as possible for their employees, the main thing they can do is to implement these modern plan design features like automatic enrollment and automatic [contribution] increases," Stinnett said.
For example, in voluntary enrollment plans, there was a clear gender gap: 68% of women participated, versus 65% of men. But when enrollment was automatic, the two rates shot up and evened out, reaching 93% for both genders.
The logic of that solution may not be obvious, since women were already doing better than men on enrollment. But as Vanguard pointed out, auto-enrollment makes the biggest difference for low-wage workers — many of whom are women.
"At first glance, it might appear that men are benefiting more from automatic enrollment than women," the study said. "However, lower-wage individuals see the largest improvements in retirement savings from automatic enrollment, and a higher proportion of women have wages lower than men."
Of course, this would not directly address what Vanguard considers the root of the problem — the income inequality between men and women. But it could be a step in the right direction.
"It's not a silver bullet to solve the retirement and wage gap, but adopting that feature can help more women begin and continue their retirement savings," Stinnett said.
