Women receive lower pension income than men: the retirement savings gender gap

Published: June 1, 2022 at 6:00 am

There is a lot of hullabaloo about glass ceilings and pay gaps based on gender across industries. However, the debate often fails to recognize that this leads to a disparity in retirement savings.

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There are many reasons women have always received lower, and this has often led to delayed retirement. While efforts are being made to decrease the wage gap, this report states that women still earn nearly 19% less than men for the same jobs. The gap is even wider for transgender folks.

Opportunity gaps stem from gender-based discrimination during hiring, lack of growth opportunities within the organization, and other factors that stunt pay rise. The lack of financial literacy also contributes to this.


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Women also lag when they take breaks for maternity or compassionate care for family members. This has been concluded by this journal that takes into account, the maternity policies and their economic consequences on the careers of women around the world. There is thus a domino effect that causes lower retirement savings.

This report by Mckinsey has concluded the impact of the Covid-19 pandemic on women’s careers and gender equality. The pandemic has put a greater dent in women’s savings as compared to men. This can be attributed to more job losses or more resignations because of the unavailability of schools and childcare. According to the report, women’s jobs are1.8 times more vulnerable to the coronavirus crisis than men’s jobs. Despite women making only 39% of global employment, they make for 54% of Covid-caused job losses. Globally, many workers have also been forced into early retirement and sadly, this also affects the womenfolk more.

Decoding the Gender Retirement Savings Gap

Here are the primary reasons why the gender retirement savings gap exists:

Less financial literacy: It is an age-old perception that women don’t know much about financial instruments and money management. While totally false and unfair it has conditioned generations to put the savings responsibility on men. Women are equally capable of learning about finances and the increasing number of women in finance bears testimony to that. 

Lack of opportunities to grow within the organization: Women often struggle to make their mark in their workplace because their superiors think of them as less efficient. There is also a reluctance to take women in roles or projects assuming their potential leaves or inability to work in shifts. This leads to stagnation in the organization.

Wage gap: Lower wages lead to lower savings and this becomes an unending cycle. It also leaves them lesser money to spend on health insurance and thus unexpected medical bills take a toll on retirement savings.

The number of years in the workforce: Women often need to take breaks for maternity and other reasons. Also, even in modern times, they often shoulder a huge load of family responsibilities and thus need to choose part-time work or sabbaticals. This makes it even tougher to build a retirement corpus as big as the men.

Is there a way to get rid of or at least narrow the Gender Retirement Savings Gap?

Increasing financial literacy: In the olden times, most financial planners, investment advisors, and even insurance agents were men and thus there was this hesitation to talk about money. This has led many women to hand over the reins of their money to the men in their lives and ripped them off their retirement savings. Now that all information is available at a tap and online communities are more active and informative than ever, it is high time women take control of their finances.

The first step to reducing the retirement savings gender gap is to increase financial literacy. It is never too early to begin. Parents must include financial literacy lessons in their child’s learning plan and schools must consider including it in the curriculum. Women who are already earning must make it a point to read about financial planning and money management or get in touch with an expert to understand. 

Being mindful about spending habits: Apart from reducing impulse buys, women also need to be mindful of their family contributions. Every family has different dynamics and there is no ideal way to approach savings. However, it is a good idea to be mindful of the contributions. If there are other earning members, are they shelling out a similar percentage of earnings towards household needs? Are your contributions leaving you anything for your retirement? It may be an unpopular opinion, but your life can take unexpected turns at any time and it is a good idea to be wise with your savings.

Organizations and policymakers need to be more sensitive to the needs of women and come up with policies that protect their interests. Apart from narrowing the wage gap, organizations must offer more opportunities for working from home and more flexibility to take care of other responsibilities alongside the job. Maternity breaks must not impact the growth trajectory of women and glass ceilings need to be shattered. Organizations must also offer financial planning or awareness training to help their employees make better decisions. 

Better facilities for mothers: Governments must mandate and organizations must facilitate mothers with pumping rooms, creches, refrigerators, and breaks to manage their responsibilities associated with motherhood. This will help them stay in the workforce and also reduce attrition for organizations.

According to the latest Gender Gap Report, the gap in retirement savings in India has widened by 62.5%. Women need better representation in politics, leadership, and technical roles, and special efforts need to be taken to increase the literacy rate. Household setups need to be more flexible and open-minded to accommodate women shouldering dual responsibilities and workplaces need to be more inclusive. Women themselves must take charge of their future and work towards being more informed. 

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Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation for promoting unbiased, commission-free investment advice.
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