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Nature or Nurture? Why Women Don't Save for Retirement

Monday, 10 Dec 2012 | 10:38 AM ET
Digital Vision | Getty Images

The good news coming out of this year's "New Retirement Mindscape City Pulse Index," an annual survey conducted by Ameriprise Financial Services, is that women are more confident about their retirement prospects: two thirds of affluent women consider themselves confident or somewhat confident about being comfortable in retirement.

The bad news, said Suzanna de Baca, vice president of wealth strategies at Ameriprise, is that women "shouldn't be feeling this good."

In the survey of 10,000 affluent,middle-aged Americans, women lagged behind men in nearly every category of retirement planning. Only 44 percent contribute to a workplace retirement plan and 42 percent are investing for retirement on their own. Slightly more than half of men do both. Less than 20 percent of women know how much income they'll need when they retire, the survey found, compared with 28 percent of men.

According to another recent study, by the Employee Benefits Research Institute, affluent women generally do better than men in contributing to 401(k) and other pension plans. Ameriprise's survey contradicts the EBRI study. While they may have the funds, said de Baca, "the last thing they are doing with their money is putting it aside for retirement." "There's a disconnect between saying, 'It's all OK,' and not doing anything" about retirement, she said. (Read More: Women Are Breadwinners? It's Complicated.)

De Baca acknowledges that investing by women as a whole is limited by the wage gap. She traced affluent women's lack of retirement readiness to their inconsistent work histories.

"Women are in and out of the workforce more than men," de Baca said. "We leave for childbearing and child rearing and, increasingly, care giving for parents." Each departure means a break in contributions to an employee-sponsored retirement plan, and when they rejoin a company or find a new job, they don't re-enroll.

The solution to women's dotted-line work pattern is fairly simple, said de Baca. Women need to continue to contribute to IRAs and other tax-deferred plans that are available even when an employer isn't matching their contributions. "There's also nothing wrong with taxable savings," she said. On-again, off-again workers to rid themselves of the mindset that being out of work means being out of the savings game.

Women face other challenges when it comes to retirement. For one thing, the conversation about retirement has traditionally not included them. "Fifty years ago, women were financially dependent on other people," de Baca said. "For most women, financial responsibility is a new concern, and people have not been talking to women about retirement."

As a result,retirement advice is geared to men's concerns, and men's timetables. The Ameriprise survey found that women underestimate the number of years they'll live in retirement by at least five years. While a little less than half think are worried they'll outlive their retirement savings, statistics show that more than half likely will.(Read More: American Finances Get Passing Grade.)

It's not that women don't talk about retirement. "But maybe the conversation is a little different," said de Baca. The Ameriprise survey found that women look at retirement with an eye to lifestyle: They make concrete plans about finding meaningful work and hobbies and about staying healthy far more than men, who are more concerned with the financial number they have to hit.

"Men tend to be skipping the dreaming part," said de Baca. "Women are not taking the steps to do the planning."

It's an open question whether men and women plan differently for retirement because of innate gender differences or purely economic ones. Women have a well-documented aversion to risk when it comes to investment, but is this because they are more conservative by nature, or because historically they've had less cash to lose?

The same question goes for why women should dream of retirement while men plan how to fund it. Whatever the cause, de Baca's solution is cultural, and revolutionary: "Couples,"she said, "need to talk to each other about these things."

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