Do Women or Men Save More for Retirement?

A recent report by the U.S. Census Bureau underlines the challenges women have not only in earning a decent living, but also in financing retirement. Women make less than men—just 78 cents for every dollar earned by a man. And as Jonnelle Marte of The Washington Post notes, the pay gap means women don’t save as much in retirement accounts as men. On average, women contribute 10.8 percent of their pay to retirement accounts, versus 11.4 percent for men.

Numerous social and economic forces—lower average wages, positions less likely to offer pensions or retirement savings options, interrupted careers for child and parent care, and higher medical spending—contribute to a bleaker retirement outlook for women. But while women's income in retirement is about half that of men, according to AARP, their money has to last longer because they have higher life expectancies.

Don't freak about about retirement. Learn more through the Consumer Reports Retirement Planning Guide.

A recent survey of Consumer Reports readers found that the more a woman contributes to the household’s overall income, the greater say she has about concerns related to retirement. But breadwinner or not, any woman can improve her confidence about money matters and, quite possibly, her chances of living securely in later years. Our suggestions:

• Educate yourself about investing. “The Little Book of Commonsense Investing,” by John C. Bogle (John Wiley & Sons, 2007), is a useful primer by the founder of the investment giant Vanguard. On Bogleheads, a community of Bogle’s followers share insights and advice on a variety of financial topics. Women's Institute for a Secure Retirement, financed by public and private grants and individual donations, offers simple explanations of investment concepts, such as dollar-cost averaging and mutual-fund expenses. The Securities and Exchange Commission’s topic pages provide more information.

• Don’t avoid risk. Stocks, which carry greater risk and potential for growth, can help savings grow before retirement. In retirement, they can protect a nest egg against inflation. You can reduce unnecessary risk by diversifying your holdings with broad-based stock (equity) index funds. Consider having at least 40 percent of your portfolio at retirement in stock funds. Put the rest into bonds, with a small percentage in cash. (If you’re expecting a significant pension, you may be able to hold more in stocks.)

• Count on a reverse mortgage last. None of our 22,000 readers reported using this arrangement, which lets homeowners draw from the equity in their homes and stay put for their lifetime. Among the negatives: potentially high up-front fees and the possibility later in life that you won’t be able to keep up with home maintenance, taxes, insurance, and other loan requirements. Our advice is to investigate other options first, such as family financing, and to wait as long as possible to borrow. Ask a certified financial planner or other professional to determine whether you can pay required expenses.

For specific advice for married and single women—especially those nearing retirement—read "Why Women Should Think Differently About Retirement Planning," from the October issue of Consumer Reports.