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Men, Women Differ in 401(k) Habits

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Posted: February 12, 2008 8:37 p.m.
Updated: April 3, 2008 2:02 a.m.
 

Even in 401(k)s, research has shown there is a difference between the genders when it comes to expectations and use of 401(k) plans. Women, according to a major financial company’s research, are more likely to have a smaller account balance and to be more concerned about their ability to save enough for retirement than are men. And, women are more likely than men to highly value a 401(k) plan.

Despite similar participation rates between men and women in company sponsored retirement plans, the survey found that female workers are less confident that they will be able to retire in a lifestyle they would consider comfortable and have less money saved for retirement compared to male workers.

More than half of women surveyed believe they could work until age 65 and still not have saved enough for retirement, and if they don’t take action, they may be right.

The survey reports:

• Women contributed a median of six percent of their pay to a company sponsored retirement plan compared to seven percent for men.

• Women report spending just five hours per year monitoring and managing their retirement accounts, compared to 10 hours for men.

• Women report lower current retirement savings than men.

• Women report not knowing as much as they should about retirement investing (80 percent for women vs. 67 percent for men).

• Despite having increasingly longer life expectancies, women estimate that they will need to save an average of just $639,000 to meet their retirement goals (1/3 lower than men, who estimated an average need of $941,000).

When women were asked to choose between excellent retirement benefits or a higher salary, women were more likely to choose the security of excellent retirement benefits. Despite what women told the pollsters, they reported a nearly identical participation rate to that of men. Women also started saving in their employer’s plan at the same age (27 years old).

What does all these statistics prove? Both men and women need to make a plan, and work the plan with a financial advisor to help reach their goals. The basic value of a company sponsored plan is that you have a systematic contribution amount that comes off the top of your paycheck before you spend what’s left. This way, you, your employer and the government help you plan for tomorrow and a rainy day. Remember, “no one plans to fail, some just fail to plan.”

 

Jim Lentini, CLU, ChFC, IAR, is president of Lentini Insurance & Investments Inc. His column represents his own views, and not necessarily those of The Signal.

Copyright: The Signal

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