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The Retirement Savings Gap: Why Women are Walking Away from Workplace Retirement Plans

Chris Magno

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Workplace retirement plans offer a path to greater financial security, yet many women in the workforce are choosing to opt out from employer-sponsored plans. From budget constraints to alternative investment preferences, find out the reasons behind this trend.

There's a persistent bias in how financial topics are presented to women.

For young women, the narrative often centers around shopping and discretionary spending. Middle-aged women are often categorized into domestic roles, overlooking their broader wealth-building strategies. And older women frequently face dismissive treatment, assuming dependency on a spouse.

These outdated biases have no place in the retirement savings conversation, says Kelly Hogg, DVP, Sales Strategy & Channels for ADP Retirement Services. "Financial empowerment knows no age or gender. True retirement planning recognizes that every individual brings their own unique strengths and goals to the table."

For today's female workforce, financial independence and retirement security are more crucial than ever. Not only do women continue to have longer life expectancies than men, but the traditional family structure has evolved, meaning they don't or can't rely on shared income. Plus, the gender pay gap persists, impacting their ability to save — with female employees earning approximately 82 cents for every dollar earned by their male counterparts.

Numbers don't lie

Statistics paint a sobering picture. According to ADP's latest Women and Investing study, a significant portion of women in the workforce have less than $100,000 in retirement savings, falling far short of what experts recommend for a comfortable retirement. So, the question remains:

Why are so many women are choosing not to participate in their workplace retirement plans?

Financial constraints

Twenty-six percent of women cannot afford to save. This reflects the ongoing challenges of balancing immediate financial needs with long-term financial security.

Lack of employer matching

For 15% of women, the absence of employer matching contributions is a deal-breaker.

Alternative investment preferences

Interestingly, 25% of women prefer to invest outside of their employer-sponsored plans, raising questions about whether they're maximizing all available retirement savings opportunities.

"It's unfortunate that many women we work with report receiving less financial education throughout their lives, making the retirement planning process more intimidating and less accessible," according to Hogg. "And since women typically outlive men by five to seven years, it's vital to have a plan to make retirement savings stretch further."

Even among women who do participate in workplace retirement plans, there's a notable lack of personalized planning:

• Only 12% have a customized retirement plan
• 37% struggle with calculating their retirement savings needs
• 24% worry about making their retirement savings last throughout their lifetime

The data is clear: women want guidance but aren't getting it.

Creating a retirement action plan

Many of the challenges women face can be addressed by leveraging the tools and resources available through a robust employer-sponsored plan, including:

• Retirement planning calculators that help demystify the savings process
• Educational workshops that provide valuable financial literacy
• Professional financial guidance to help create personalized retirement strategies

For women who are currently opting out of their workplace retirement plans, it's worth taking a second look at the options available through an employer-sponsored plan. Utilizing these valuable resources could be the first step toward building a more confident and comfortable retirement.

Not every retirement plan includes the array of financial wellness resources that women find most useful, so it pays to ask questions and shop around. A plan with more universal appeal — including financial education tools — can pay off workforce-wide for employers with higher retention rates, more competitive hiring and less employee stress about finances.

Is your plan built to maximize the retirement savings of all employees? Learn more about ADP's retirement solutions.

_{ADP, Inc., and its affiliates do not offer investment, tax, or legal advice to individuals. Nothing contained in this article is intended to be, nor should be construed as, particularized advice or a recommendation or suggestion that you take or not take a particular action. Questions about how laws, regulations, guidance, your plan's provisions, or services available to participants may apply to you should be directed to your plan administrator or legal, tax or financial advisor.}

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