When Robin Giles asks women why they aren’t saving for retirement, they often say the same thing: They don’t make enough money.
“It’s hard to convince people who are just scraping by to feel like they have money to put into retirement savings,” said Ms. Giles, a certified financial planner in Katy, Texas. Socking away money in a retirement account that can’t be touched without penalty until age 59½ is particularly daunting for people living paycheck to paycheck.
Women often find themselves in this position. Some take time out of their careers to have children, and when they return to work, many are self-employed or take lower-wage, part-time jobs — 63 percent of part-time workers in the United States are women, according to the latest data from the Bureau of Labor Statistics. As a result, women frequently make less income than men and have less access to an employer-sponsored retirement plan.
Nearly two-thirds of workers in low-paid jobs are women, with Black, Native American and Latin women particularly overrepresented compared with their shares of the overall work force, according to a study by the National Women’s Law Center. Some women take jobs such as fitness-class instructor, crossing guard or Instacart shopper, or do babysitting and housekeeping work, to get the flexibility they need to take care of their children or aging parents, Ms. Giles said.
“But then they do not make a livable wage, and it’s very difficult to save for retirement when you feel like you’re working for pocket change,” she said.
In light of the benefits of flexibility, the issue of retirement savings has taken an “extremely limited role” in women’s decision-making about staying home with their children, according to a 2022 survey of 1,586 mothers conducted by YouGov that was commissioned by TIAA and designed by the economist Emily Oster. Thirty-three percent of women reported putting “a lot of thought” into the effect that staying at home would have on their retirement savings, while nearly 20 percent said they didn’t think of it, the survey showed.
Other research has found that half of all mothers in the United States have no retirement savings, according to a survey cited in a 2023 report from the Century Foundation, a think tank that studies economic and social issues. Figures from the Census Bureau show there are about 34.5 million mothers living with children under the age of 18.
Leaving the work force for as little as five years to take care of a child could result in millions of dollars in lost earnings because of the way the U.S. retirement system is structured, said Laura Valle-Gutierrez, a fellow at the foundation. Caregivers lose an average of $237,000 in earnings over their lifetime, according to a 2023 Urban Institute study, with lost retirement income from Social Security and employment-based plans making up an estimated 20 percent of that total.
“We have a system of retirement that is completely tied to work, not only with pension plans but because Social Security earnings are tied to employment,” Ms. Valle-Gutierrez said. Women, in general, receive $5,000 less in annual Social Security benefits at retirement than men, she said.
Strategies for saving
There are ways to save for retirement even if you work part time, but doing so is not easy, Ms. Giles said.
“You have to be a diligent saver, and preferably set up automatic contributions so you never see that money before it gets invested for your future,” she said. AARP Research has found that Americans are 20 times more likely to save for retirement if contributions are taken from a paycheck automatically.
Crystal Cox tells her clients that it doesn’t matter how little money they put away each month, even if it’s just $5 or $10. “Whatever amount you can save per month, you just have to start, because it creates the habit,” said Ms. Cox, a certified financial planner and senior vice president with Wealthspire Advisors in Madison, Wis.
To help her clients find a few extra dollars in their monthly budget, Ms. Cox analyzes six months of credit card and bank statements to find recurring expenses that can be stopped.
“So many people don’t know where their money is going,” she said.
Ms. Cox learned recently that one of her clients, a 42-year-old woman who works in real estate, could cut her monthly expenses by $400 fairly painlessly. The client was paying for several monthly subscriptions that she never used, including Disney+, SiriusXM radio, YouTube Music and a gym membership. She also didn’t realize how much she was spending on impulse purchases at Target and Amazon, Ms. Cox said.
The client canceled all her unused subscriptions and deleted the Amazon app from her phone. “Deleting the app made a huge difference in her spending, because it’s so easy to think of something you ‘need’ and then buy it with one click,” Ms. Cox said.
The client agreed to deposit the money automatically into her Roth individual retirement account each month. “While that may not seem like a lot, $400 a month for the rest of her working life actually translates to a huge difference in her retirement,” Ms. Cox said. Assuming a 7 percent interest rate, a person could have $450,000 by the time she’s 69½, Ms. Cox said.
Even a tiny amount of money can add up over time. Ms. Giles cited the example of buying a daily latte. (The much-maligned financial advice to skip the morning trip to the coffee shop to save money does work, she said.)
“It can be powerful when you show them the math and what they could save when you extended it out for a month, six months, even 12 months,” Ms. Giles said. For instance, if you could save $6 a day, you would have an extra $180 at the end of the month and $2,160 at the end of year — and that’s before interest.
Another way to find savings is to take a closer look at annual bills — like cellphone and utility bills and insurance policies for your home and car, Ms. Giles said. Most people pay these invoices year after year without asking what they’re paying for, she said.
“Put in a call to your insurance agent and ask to review the coverage — specifically ask if there is anything you can cut back on, particularly if any of your needs have changed,” she said.
Once you find extra money, it’s important to set it aside immediately, Ms. Giles said; she recommends having any found savings automatically deducted from your paycheck and put into an I.R.A.
Too often people open an I.R.A. with the best of intentions but then underfund it by not making the deposits monthly, believing they will fund it in a lump sum at the end of the year, said Melody Evans, a wealth management adviser at TIAA. “But then other bills come up, there are emergency needs,” she said.
Mothers or caregivers who take time off from work to care for a child or an elderly parent should try to continue saving for retirement. For couples, if one spouse is working full time and the couple files a joint federal income tax return, the nonworking spouse can open and contribute to a spousal I.R.A., Ms. Giles said. In 2024, the annual contribution limit for Roth and traditional I.R.A.s is $7,000.
Overall, it’s a good idea for women to establish their own savings accounts and not rely on their spouse to fund their retirement savings account, said Ms. Cox, who often works with women who are recently divorced or widowed and find themselves struggling to make sense of their finances. “Having your own savings helps establish good money habits,” she said.
Maximize your contributions
Too often, couples think about employer-sponsored retirement plans as a benefit only for the spouse who is working, Ms. Evans said. She recommends viewing retirement benefits as a vehicle for both spouses, much as a couple would view a working spouse’s health care benefits.
For instance, one of Ms. Evans’s clients is a teacher with access to a 403(b) retirement plan, a defined contribution plan offered by public schools and certain tax-exempt organizations. Her husband is self-employed and does contract work. While he can earn a significant salary over the year, the couple never know exactly when he’ll get a paycheck or exactly how much money he will earn.
If the wife was considering just her own $60,000 salary, she would probably plan to save about 7 percent ($4,200) for retirement, Ms. Evans said. Instead, the client included her husband’s anticipated salary in her calculations and is planning to save more than 18 percent of her pay ($11,200) because he doesn’t have access to the same type of low-cost retirement plan she does.
If your spouse has an employer-sponsored retirement plan, consider whether you’re saving enough for one person or two people to retire, Ms. Evans said.