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Women Are More Likely to Contribute to a 401(k) than Men


Women are often criticized for a lack of personal finance prowess, but a new study suggests that this is overstated.

Within Vanguard’s annual report “How America Saves 2011” are some very hopeful and often overlooked statistics. At almost every income level, women are more likely to participate in their 401(k) plans than their male colleagues, in some cases at much higher rates, and that’s the most likely place people save for retirement.

For example, 69% of women earning $30,000 to $49,999 and 78% of women earning $50,000 to $74,999 contributed to their 401(k) plans compared to 61% and 68% of men, respectively. Only in two income brackets did men participate at a higher rate than women—the highest and lowest salaries–and just barely. For those earning less than $30,000, 51% of men and 49% of women participated. Additionally, 88% of men and 86% of women earning more than $100,000 saved.

That’s good news, but only a part of the picture. “Women are saving more, but they make less so men have much higher account balances,” says Jean Young senior research analyst at the Vanguard Center for Retirement Research.

We tend more than men to underestimate how much we’ll need for retirement even though most of us will need larger balances because we typically live longer and have higher retiree health care costs. While many men think they’ll need at least $1 million, 35% of women estimate they won’t need more than $250,000, compared to only 26% of men, according to the non-profit Employee Benefit Research Institute’s 2011 Retirement Confidence Survey. Additionally, 12% of women and 5% of men say they don’t know how much they need to save.

“The biggest mistake people make is not saving enough and investing too conservatively or aggressively,” says Young. About 40% of Vanguard retirement plan participants fall into the latter category, according to the report. They either have less than 40% or more than 90% of their portfolios in equities or more than 20% in their company stock.

If you don’t start saving until your 30s—which many of us don’t—you need to sock away each year at least 12% to 15% of your earnings , including your employer’s contribution, says Young. If you don’t know what to invest in, consider a target date or balanced fund or take advantage of some of the investment advice available in many plans.

One good thing: “We know women are less likely to trade so they’re less likely to make those trading errors,” says Jean.


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    • Isn’t this what modern culture wanted, Sarah? To make boys out of men? And conversely, to make women into the new leaders, new rulers of society? For the majority of the last century, women demanded equal rights–they wanted “choices” and the ability to move into and up in the workplace just like males. Of course, they also wanted the option to stay home and have children if they desired, and they didn’t want to get knocked off the career track when that happened.

      What we’re seeing now, are the results of all that social engineering. Our culture now portrays (especially) white males as idiots–unable to think for themselves, completely obsessed with sports, inferior to other ethnic groups and minorities, and especially women. Our “rules” and our policies support the culture, giving in to workplace quotas and promotion programs based not on merit, but on your sex or ethnic class.

      Bottom line is, if women do make less than men, it’s because they’re lumping in the pay of stay-at-home moms–housewives–who have no income at all, with that of working women. From where I sit in corporate America, women are getting paid equal to, or above their male counterparts. Some may earn it, others not.

    • I’ve noticed that in so many ways my generation – around aged 32 -the men are just not keeping up. Women have to do it all: get the good education, be the breadwinner, have the kids, raise the kids, clean the house, pay the bills, ect. I’ve got to be honest, I’m finding it difficult to even find men suitable to date. They blow all their money on cars and toys and then expect me to take care of them while they play video games and wait for me to cook dinner. Gotta be honest, ready to scissor sista.

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  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.