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6 Ways Women Can Catch Up on Retirement Savings

A financial pro offers ideas for a more secure financial future

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6 Steps You Can Initiate Yourself

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While the wage gap between women and men in the U.S. is steadily improving, women tend not to have as much in retirement savings. In one recent survey, the average 401(k) balance was $79,572 for women and $123,262 for men. That’s largely because women earn less than men, on average, and many women exit the workforce during their peak earning years to raise a family or for caregiving duties, depriving them of years to contribute to retirement plans.

Other studies indicate that women are better at saving than men and are no more conservative as investors.

Women who’d like to catch up on their retirement savings could adopt one or more of the strategies below to help them achieve a more financially secure retirement. All of these steps are ones you can initiate yourself, although it’s a good idea to work with a financial adviser to coordinate and maximize your retirement funds.

1. Work another few years.

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If you could put in another three to four years on the job, you might be able to contribute longer to tax-advantaged workplace retirement plans. Not only do the plans provide an easy way to save and invest, some employers make matching contributions (basically “free money” from the employee’s standpoint).

2. Delay taking Social Security.

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By holding off starting to collect Social Security from age 62 (the earliest you can claim it) to age 70, you can receive an estimated 7 to 8 percent more from the government each year. Since a woman turning 65 this year can expect to live another 22 years , on average, this extra income can mean a lot over the long haul. 

In order to postpone receiving Social Security, you may have to work longer, but during that time you’ll be paying more in to Social Security and this will likely increase your benefit. Couples can take advantage of other strategies that may increase their monthly benefits even more. For more information, visit the Department of Labor’s website, Taking the Mystery Out of Retirement Planning.

3. If you have a retirement savings plan, raise your contribution rate.

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Even a few extra percentage points per year can make a difference, especially when used in combination with the other techniques. For example, just by boosting her annual 401(k) contribution rate from 7 percent of pay to 10 percent, a 50-year-old woman earning $75,000 with a $300,000 401(k) could increase her plan balance by about $66,000 by age 65.

This strategy doesn’t just apply to employer-sponsored retirement programs. If you’re self-employed and put money into your own self-employment retirement plan, the same holds true.

Keep in mind, the government lets people over 50 contribute more to retirement plans than younger people, through what are called “catch-up” contributions. This year, if you qualify for catch-up contributions, you’re allowed to sock away up to $24,000 in a 401(k), compared with the normal $18,000 maximum. IRAs allow $1,000 extra in catch-up contributions, raising the maximum to $6,500.

4. Downsize expenses.


The more of your money you can keep at this point, the better. So if your house requires too much maintenance or your property taxes are steep, do a hard assessment now. A smaller place or less expensive neighborhood might significantly advance your retirement savings potential.

You might even consider moving to a state that has lower taxes. Bankrate.com has a useful Cost of Living Calculator to help you see what your expenses might be in another location.

For a less drastic option than moving, see if you can find ways to lower your monthly spending where you are — perhaps by getting a lower cost cable/internet/phone package, buying generic medications instead of brand names, cutting out a restaurant meal each month and the like. Take the “found” money that you would otherwise have spent and put it into retirement savings.

5. Get a part-time job in retirement.

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A new source of income from working part-time could allow you to leave your retirement accounts alone so the funds could continue to build.

6. When retirement comes, have a plan for which investment accounts to tap first.


For instance, income taken from a Roth IRA won’t be taxed, so it may be advantageous to withdraw money from that account than another type.

If you expect your income early in retirement to be higher than it will be in the future, it might make sense to postpone pulling money out of your taxable accounts. Then, when it’s time to pay your income tax, you’ll likely pay at a lower rate.

With a few adaptations like these, and assistance from a financial pro, you may well be able to change your future retirement outlook for the better.

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