Women, men and retirement savings with Jen Turrell

Financial Fluency Episode #42: Why Women are Behind Men in Retirement Savings

Today, I wanted to take a look at retirement savings for women. Recently, I’ve seen some articles that talk about how overall in the U.S, we aren’t saving enough for retirement and then on top of that, women are being most negatively affected. Women seem to be saving less than men and I wanted to look at some of the reasons for that.

You can listen in or read below and Tweet it out hereTweet: Can women afford to live longer than men? Via @jturrell http://ctt.ec/e617a+

Here’s What I Found

I found a few studies, some longitudinal studies that followed women and men through different parts of their lives and careers. The first one I want to talk about is a study that followed Harvard MBA graduates and it was showing how the burden of student loans weighs heavier on women and why that is.

They had two students; a male and a female, graduates from Harvard MBA, they go to their first professional entry-level job and the woman doesn’t quite manage to negotiate for as high a salary as the man. There are a lot of reasons for that, women are inculturated to not really hone the same negotiation skills that men are, we’re often told to be nice, we’re told to be polite, we’re told to kiss the smelly uncle that we don’t really like when we say hello to him.

There are all these ways that women are taught to be people pleasers a bit more than men usually are. I don’t mean to make a sweeping generalisation about gender here but I think most people agree that everyone likes little girls to be “nice”.

Little girls are supposed to be cute and sweet and not aggressive and not too forward. They get called bossy and bullies, hopefully no one’s calling little girls bitchy but as you get older into the teenage years, that comes out too. Both in school and in life, people tend to encourage boys to go after what they want and be focused and driven and assertive and aggressive and women are taught to not do that quite as much.

So these could be some of the reason that the women, even these elite women from Harvard MBA, I mean if any woman in the country is going to really go in and negotiate well for her first starting salary of her first professional job, it’s probably going to be a woman who’s a Harvard MBA graduate.

So even these women aren’t managing to negotiate quite as high of a salary as the men. It’s not as drastic as in some other groups because these women are taught Business and they are going in there to get the best salary as they possibly can but still a bit lower.

Here’s Where the Real Difference Started

Where it really started to show a difference between the man’s and the woman’s ability to pay off their student loans was at the five-year point.

Five years out in their careers, things started to change a lot. Now men’s salaries were going up much higher than women’s, women were taking time off for having children, they were getting flexible work schedules, they were maybe taking different jobs that had less demanding hours and their student loan payments did not escalate the way men’s did.

A lot of the Harvard MBA men were much more aggressively paying off their loans so the length of time that the women were paying off these loans and the level they were paying them off, was much longer at a much lower payment level.

I feel like this five-year point from Graduate school, these are prime years in a man’s career. This is when he’s going for those promotions, going after new projects, doing lots of things where maybe he has to travel, he probably doesn’t have kids yet or his wife is home having the kids and he’s able to really focus on his career.

Where women at the same time, a lot of them are taking time out, they’re leaning back, you know Sheryl Sandberg wants us all to lean in in these years but you know what, not everyone can lean in and I get frustrated at this idea that it’s all on the woman:

  • To be negotiating correctly
  • To know what her salary should be
  • To own her worth
  • To be aggressive

Some of us, like myself, I had really difficult pregnancies. I had Hyperemesis, I was on bedrest for most of them, I was on medications and IVs. And some women they can have a perfectly fine pregnancy but have a very difficult and physically catastrophic birth experience.

I think sometimes, here in America, because we’ve come so far in terms of medical intervention for birth, we don’t think about how physically traumatic and dangerous it actually is. I looked up the statistic the other day from the World Health Organization and it said that everyday in the world, 861 women die from pregnancy and birth related causes.

A lot of that is definitely skewed toward the developing world where there are not a lot of prenatal services and where the medical services for birth at all are much more primitive than here in the United States. We have a much lower mortality rate for both mother and infants than in a lot of other countries but we’re not the best by any means.

Women still die every day from giving birth so the idea that it should just be this experience that everyone has and that you hop up out of bed the next day and take a week or two off and then sashay back into work with your baby at a nanny or some kind of child care facility, that’s not the reality for a lot of women.

Not All of Us Have the Same Experience

For myself again, I had really difficult pregnancy experiences and now I have two special needs children who have very different levels of need. If everything goes right and if you have a beautiful birth experience, a beautiful pregnancy, your children are fine and healthy, yeah it’s true, you may be able to hop right back into your career and it may not take that much time out for you. However, that’s not the reality for a lot of people and I think that us talking about leaning into our careers assuming that most people have these really easy, super smooth birth experiences, that’s a little bit unrealistic.

So if you do have to take time out from your career, if you do have to actually leave the job and not just use up all of your sick leave and all of your vacation days in order to have your baby and then maybe six weeks of unpaid leave on top of it. That’s a lot of time and salary lost just there, plus the contributions to your 401K, if you even have one, plus the possibility of promotions that you missed out on during that time.

For one thing, when you’re pregnant, they’re not going to put you in charge of a team that has a project that’s due right around the time you’re going to have the baby, right? They think, “Oh, she’s not going to be there” and even if you don’t get pregnant during those prime childbearing years, studies have shown that there is a cultural bias against promoting women in case they might get pregnant.

And Then The Gap Widens

So, anyways, the tendency for women to give up on their career aspirations for family growth instead of men, is something that has gone on ever since women entered the workforce. They have always been more likely to give up their career for having children than a man would.

We see now and then, more and more house husbands, especially if the wife is say, a doctor, a lawyer, a high-earning professional, a movie star, you know there are some times when the man will stay home with the children and the women will go back to work but it’s far from the norm right now.

The reason that it usually makes the most sense for the woman to stay home besides the physical birthing, nursing all of that, is that because men tend to have a higher salary than women so if one of them is going to take time off and stay home in terms of the family’s well-being, it makes sense for the highest earner to keep on earning.

If the family stays together, if there is no divorce, that makes the most sense, right? You want the highest earner to keep earning and you want the lowest earner to take the time off. However, with the number of marriages that end in divorce, this is a real problem for the wife because gone are the days of the endless alimony payments. Very few judges award alimony that goes out past a couple of years anymore even if you’ve been out of the workforce for a long time, they expect you to go get a job and support yourself.

The fact that you have given up so much of your earning potential by taking time out and not getting the ongoing promotions and salary raises and everything that you would have, had you stayed in the workforce, really isn’t accounted for in terms of maintaining your standard of living.

You may be at a certain standard of living while you’re married, you get a divorce, if you’ve been out of the workforce, I mean, some women stay out for eight or ten years while they have three or four children, that’s a significant loss of potential earnings.

As well as that you don’t re-enter the workforce at the same place you left it. Often, your industry will have kept going, kept advancing while you were out especially if you’re in some sort of Science / Technology industry. If you take five or eight years out of the Technology industry, do you think you can just jump back into a job at the same level you were at? Absolutely not.

You’re going to have to go back to entry-level positions and that’s hard for a lot of women especially if they have supported their husband through all of his career changes and aspirations and reaching big goals and getting promoted. Part of the reason he was able to do that and have children and have a family is that someone was at home taking care of them.

When women do go through divorce and now have to start supporting themselves again, often what they do, if they have some retirement savings, they may hit that up for awhile while they get themselves back on their feet. If they don’t have retirement savings, they certainly aren’t contributing to it in this period of time when they’re trying to re-establish themselves as a new single mother, in her own household.

Running two households is definitely more expensive than running one, the alimony is not going to cover it all by any means anymore. So there’s a new situation. Studies have shown that in the case of divorce here in the United States, at least, men’s standard of living goes up slightly after a divorce and women’s standard of living goes down.

I think a big part of the reason is that men have been earning more and they keep on earning more even if they pay some alimony, they still have more money to themselves afterwards especially depending on if they move into a new apartment where they used to have a big house with the family. There are all kinds of changes that can be made but overall, but the end result is that divorce puts men in a better financial position and women in a worse financial position.

Less Confidence Around Investing

I’m sure there are some more contributing factors throughout careers and lives of women as to why women ended up saving less than men.

Another one to throw out there is that women tend to be less confident about investments, about putting money into the stock market, something that they see as volatile and not that safe. After the crash of 2008, many feel that they have a lot of reason to fear. A lot of women who did have their retirement savings invested in stocks, bonds and index funds saw their savings cut in half.

If they did sell up and run then they may have carried that loss into the future. If they left it there and managed to get the benefit of the recovery, it will have recovered a good deal but it still…that was a huge hiccup in the overall growth of anybody’s retirement funds.

They say over time the stock market averages out somewhere between 6 and 12%, I think they usually put it around 8% including inflation that you should be making on your money over time but a lot of that really depends on when you pull the money out, when you retire, when you stop putting money in. So anyone who had just retired right before the crash of 2008 and no longer had earnings to continue to put in there but had to take money out in those years when the stock market was down, that was a really scary thing.

I don’t know that if they went back to work and kept working after the recovery if they would have continued putting money in. So not feeling comfortable with investing, a lot of women keep more in cash and keep more in very safe, low risk but low return types of investments; savings accounts, bonds, CDs, money market accounts.

Women who are afraid of losing money more than they want to make it, they tend to take these very safe investments that often don’t quite even return as much as inflation which means over time, they’re losing money.

The Main Culprits

We have the wage gap that starts out with your first job, usually, that widens as you have children, if you do have children and will also widen as you get promotions based on that lower starting salary than men had.

And Divorce. Women are worse off, not all women get divorced, but for those who do, that makes a significant impact on their ability to save for retirement.

I’d also like to throw special needs caregiving in there just because I have special needs children and a lot of the women I know, our parents are in their 70s and 80s now. A lot of people I know have young children at home, their children haven’t quite gone to college yet and they are starting to have to think more and more about caring for their parents as well.

And that’s another place where, although some men do care for their ageing parents, it tends more often than not to be daughters, wives and sisters who care for the ageing parent or the disabled loved ones. Again, it makes the most sense for them to leave the workforce or cut down to part-time work or take flex hours or change to a more family-friendly type of business that may be lower paying to care for the loved ones, because the fathers, sons and brothers are able to earn more in their careers. Then we also have the fear of investing.

All of this can contribute to women falling far behind men in retirement savings.

Now, What Can We do About it?


For one thing, on a micro level, we can hire women. We can hire women and we can pay them fairly. We can hire female freelancers. We can hire companies that are started by women. We can hire companies that have female CEOs. We can put our retirement investments into companies that have female CEOs and who practise gender parity in their hiring and paying practices.

There are few ways you can find out more about that. I’ll put some links in the show notes. One is Motif Investing No Glass Ceiling motif which I love. There are a number of companies now that are focusing on women.


When we think about women being afraid of investing, a lot of that is down to the financial services industry. I think for ages, women have felt not heard, not seen, not listened to by the financial services industry. A lot of the financial industry’s advertising and the way they position and present themselves is mostly appealing to men because in the past, men have had the most control of the money that goes towards retirement.

Women often have control of the household budget but because men are the earners and they would have pensions and they would have retirement plans or IRAs or whatever it is, the financial services industry overall is very skewed towards men. However, there are some great platforms and companies right now that are focusing completely on women.

A few of my favourites are DailyWorth. DailyWorth is a financial media platform but it’s so great for educating women about all kinds of things in terms of their money. I love DailyWorth and just to be totally transparent, I am part of their Connect platform and I do write for them monthly.

The founder of DailyWorth, Amanda Steinberg, is also starting a new company with a partner called WorthFM and this is going to be a low barrier to entry savings and investments platform, similar to Betterment which I’ve promoted before on this show because I love Betterment.

It’s a great way for people who have not invested before to get started. There’s also Acorns, which I’ve mentioned before and that really is the lowest barrier to entry, the way Acorns runs it but they don’t have tax advantage retirement accounts so I’m not going to lump them in here with the others because WorthFM and Betterment do have retirement account options. Another platform is Ellevest. They focus very much on women.

Raising Prices

And if you are self-employed, if you are a self-employed woman, a freelancer, a small business owner, an entrepreneur, raise your prices. Go ahead, raise your prices. See how it feels, see what it’s like, go look at your competitors. Are men doing the same jobs for more money than you are? Are you doing work that’s just as good or maybe better? If you’re not, take some time to think about the level of work that you’re doing and let’s make sure it’s better than your competitors and you can charge more, you can confidently charge more.


Another thing that we can do is that if you are working for a company, find out what your male co-workers are making. Find out and talk to people at your company, talk to other women, find out what they’re being paid, find out what some of the men are being paid and talk to the company.

If it’s hard to approach on your own saying, “I believe that I am being paid less than my male co-workers”, you can get a group of women together, talk about it, figure it out. There are a lot of companies out there who aren’t strategically and consciously paying women less, it’s just each individual hiring decision, if the negotiation doesn’t go as high, I mean, they want to save money, they cut wherever they can. If they can bully you down to a lower price, they probably will but if it gets exposed that this is a company wide problem, that the company overall is paying women less than men, that is a PR nightmare that no company wants to have.

I think a lot of companies, if it’s brought up and if it’s shown that, whether they meant to or not, they really are paying women less, a lot of them will fix it. So, I think you should tackle it, go ahead and try.

I think we also need to start publicly discussing issues like family leave, not just for women but for men as well. The more men take paternity leave, the less of a women’s issue children will be. Right now, children are a women’s issue but if men take time off too, if men bond with the children, if they trade off with the woman going back to work, if they have some sort of interesting flex schedule, women won’t be financially punished for having children anymore because it will be a family issue and not just a women’s issue.

So, that’s my episode for today. Thank you so much for joining me. I hope it was interesting to you. I hope it was helpful. If you liked it, please subscribe and join me every week.


If you enjoyed this episode you can subscribe to Financial Fluency here on iTunes and listen every week. If you like what you hear, please also leave an awesome iTunes review

I do two episodes every week, one solo and one interview.

I also have the fantastic Mastering Money Matters group, a monthly membership group where you can join and we talk about all the different pieces week by week of getting our money systems set up and how we look at, think about and value money and all areas of our lives.

It’s a very supportive and private group just for women and it’s a safe place to hang out and talk. It’s kind of the extension of the interviews I’ve been doing with mainly entrepreneurs on this show, and it’s where we can talk about the things we may not want to broadcast out to a broader audience.

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Jen x

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