Millennial women are falling behind men when it comes to retirement saving, T. Rowe Price found in a survey.
Millennial women are saving an average of 5% of their salary, compared to 7% for men. While this is only slightly below the savings rate of men, perhaps because they are earning much less, their 401(k) balances are half that of men’s.
Among Millennials who are not saving in their 401(k) plan, 68% are women. Women are 16 percentage points less likely than men to feel very or somewhat comfortable that they are on track to meet their financial goals, and 50% of women think they will have to reduce their standard of living in retirement.
However, Millennial women’s career prospects are brighter
than Baby Boomer women’s prospects, as 43% of Millennial women have a college
degree, compared to 28% of Baby Boomer women. “This is significant progress and
holds great promise for their future opportunities, employment and earnings
prospects,” T. Rowe Price says.
Furthermore, 50% of Millennial women said they would increase their savings rate to receive the maximum employer contribution.
T. Rowe Price suggests a number of steps plan sponsors can take to engage women more in saving for retirement, starting with education about finances, budgeting and retirement needs. Stretch matches can also motivate women to save more. Automatically enroll women, and at a high rate, the investment firm suggests; the survey found that 79% of Millennials are glad their employer automatically enrolled them in their retirement plan, 47% wish they had been enrolled at a higher deferral rate, and 69% stick with automatic increases.