While women continue to make significant gains in the workforce, their road to and through retirement is often hampered by circumstances outside of their control. While women outnumber men among U.S. college-educated professionals and hold 35% of jobs in the country’s 10 highest-paying occupations, the gender pay gap persists. In fact, it has only narrowed slightly over the past two decades. In 2024, women earned an average of 85% of what men earned, compared to 81% in 2003.1
Unpacking the gender wealth divide
The wage gap, which naturally translates to a savings gap, can be detrimental for women whose average lifespans typically outpace those of their male counterparts. According to the Social Security Administration, the life expectancy for women is currently 81.6 years compared to 76.7 years for men. Women’s longevity is an important consideration and risk factor for retirement since the longer you live, the longer your money needs to last to support your lifestyle and healthcare needs.
However, even when women make the same or more money than their male counterparts, they tend to spend more time out of the workforce than men, caring for children or sick or aging family members. This can hinder women’s ability to maximize savings during their peak earnings years leading up to retirement.
Women are also more likely than men to retire early to accommodate the care needs of a spouse or aging parent. This can lead to women taking Social Security benefits earlier than planned, resulting in a significantly smaller monthly benefit for life than if they were able to wait until full retirement age or later to begin taking benefits. All of these factors point to why comprehensive financial and retirement planning is critical for women.
Overcoming wealth building challenges
Despite the challenges you or the women you know may face, there are steps you can take now to build confidence in your financial future.
- Take advantage of opportunities to reduce taxes and supercharge savings
Seeking opportunities to reduce taxes can ensure more of your hard-earned money is working for you. Workplace benefits such as tax-advantaged flexible spending accounts (FSAs) allow you to pay for certain healthcare and childcare expenses with pre-tax dollars. You can reduce your taxable income even more by making pre-tax contributions to a 401(k), 403(b) or similar qualified retirement plan, while maximizing retirement savings.
- In 2025, you can contribute up to $23,500 to your employer’s plan if you’re under age 50
- If you’re age 50 - 59, or age 64 or older, you can contribute an additional $7,500 in catch-up contributions, for a total of $31,000 for the year
- And thanks to the new “super” catch-up contribution introduced in January 2025, workers ages 60 - 63 can now contribute an additional $3,750 to their employer-sponsored retirement accounts, for a total catch-up contribution of $11,250.2 That can make a significant difference in savings as you near retirement.
- Don’t underestimate how much you will need
Many women are surprised to learn how much of their income Social Security is expected to replace in retirement. According to the Social Security Administration, for the average earner, benefits only replace about 40% of pre-retirement income. That makes other sources, such as a pension, employer retirement plan savings, and personal savings critical for meeting all of your lifestyle needs in retirement.
Keep in mind, in many cases, women may qualify for a higher monthly Social Security benefit based on a current or former spouse’s earnings record versus their own record. Since Social Security claiming strategies are complex, it makes sense to work with an independent wealth advisor familiar with the unique financial planning challenges and considerations women face to develop a strategy for how you will pursue your income goals in retirement.
- Choose the right partner for your journey
Life’s transitions can provide women with opportunities as well as obstacles. Major life changes, such as a new job or promotion, birth of a child, change in marital status, or milestone events like retirement or becoming an empty nester may require adjustments to your strategy, goals, and timeline.
We believe that working closely with experienced wealth advisors who take the time to get to know you and your family and follow a disciplined and tailored approach to pursuing your goals is critical for navigating life’s transitions. Meeting regularly with your team of advisors can help you prioritize the things that are most meaningful in your life and put a tailored place in place to help you remain on course toward your goals.
To learn more about strategies for overcoming the gender wealth gap, listen to our latest podcast episode of Frank Wealth Insights with guest speaker and wealth advisor Chelsea Hussey CLU®, ChFC®, CFP®. To learn how your team of independent wealth planning professionals at Return on Life® Wealth Partners can help you and your family pursue the Return on Life® you desire, contact us today for a free consultation.
About Return on Life® Wealth Partners
Return on Life Wealth Partners is an independent Registered Investment Advisor (RIA) founded in 1994, with headquarters in Cleveland. The team provides comprehensive wealth planning services to individuals, families, and business owners. By examining clients’ lives before their money, Return on Life® aligns its advice with clients’ values. This personalized approach also extends to the institutional and corporate retirement plan services available through 401(k) Prosperity®.
1Pew Research Center, 04 MAR 2025, https://www.pewresearch.org/short-reads/2025/03/04/gender-pay-gap-in-us-has-narrowed-slightly-over-2-decades/
2Before catch-up contributions can be made, participants must first contribute the maximum annual amount of $23,500 for 2025 to their employer plan. Participants must be ages 60, 61, 62, or 63 by the end of the calendar year to be eligible to make an additional $3,750 “super” catch-up contribution. Once participants turn 64, they revert to the standard $7,500 catch-up contribution amount for ages 50 - 59, and ages 64 and older. Employers are not required to offer the super catch-up contribution option. Plan participants should check with their employer to determine if this feature is available in their retirement plan.
Important information:
Securities and Retirement Plan Consulting Program advisory services offered through LPL Financial, a Registered Investment Advisor, member FINRA/SIPC.
Investment advisory services offered through Planned Financial Services, LLC, dba Return on Life Wealth Partners, an SEC-Registered Investment Adviser and separate entity from LPL Financial.
The information provided in this document is for informational purposes only and should not be construed as investment, tax, or legal advice. While we strive to provide accurate and up-to-date information, there are no guarantees that the strategies discussed will achieve the intended outcomes. Individual results may vary depending on factors such as market conditions and personal circumstances.
All examples and case studies are hypothetical and provided for illustrative purposes only. The strategies discussed may not be suitable for every individual or financial situation. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal. Tax laws are subject to change and should be discussed with a qualified tax professional.
Any references to Social Security benefits or claiming strategies are general in nature and should not be relied upon without consulting with your own financial or retirement planning advisor. Eligibility, benefit amounts, and strategies may vary based on personal earnings history and marital status.
Mention of any third-party individuals, companies, or websites (including the Social Security Administration, Pew Research, and LPL Financial) is provided for informational purposes only and does not constitute endorsement or affiliation unless explicitly stated.
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