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Retirement Readiness Has a Gender Gap

New research finds gender parity in 401(k) plan participation, but not in retirement readiness.

Aon Hewitt found that 83% of American women aren’t saving enough to meet their needs in retirement, compared with 74% of men. Additionally, Aon Hewitt projects women will need 11.5 times their final pay to meet their needs in retirement, compared with 10.6 times pay for men. Moreover, the research found that there is a gap of 3.3 times pay between what women need and what they’re actually on track to have saved in order to retire at age 65, while for men, the difference between needs and resources is just 2.0 times pay.

This shortfall means women, on average, will need to work until age 69 – one year longer than men – in order to meet 100% of their needs in retirement.

While women and men are participating in employer 401(k) plans at the same rate (79%), Aon Hewitt, which looked at the retirement saving and investing behaviors of approximately 3.5 million DC plan participants from more than 125 employers, found that women are saving less.

On average, women are contributing 7.5% of salary to their 401(k), more than a full percentage point behind their male counterparts (8.7%). Those lower savings rates combined with disparities in salaries are contributing to low 401(k) plan balances for women. In 2015, women had an average plan balance of $71,060 compared with $119,150 for men, Aon Hewitt found.

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