Pay Gap Means Women Need to Save More for Retirement

The average American woman must save $1.25 for every $1 a man invests in retirement savings to build an equivalent nest egg, a NerdWallet data analysis shows.

For every dollar men earn, women in the U.S. make 80 cents on average, according to the latest available data. That wage gap can lead to an even bigger divide down the road when it comes to retirement savings in a 401(k), NerdWallet says.

The company looked at U.S. Census Bureau data from 2007 and 2015 and found Rhode Island saw the earnings difference narrow the most. There, women have to save for retirement at a rate of $1.17 for every $1 men put away. In Oklahoma—the bottom-ranking state for wage gap improvement during the same time period—women planning for retirement would need to sock away $1.37 for every $1 men save.

NerdWallet notes this doesn’t mean women need to move. “Research suggests the issue isn’t so much that a woman working as a bank teller in any given state makes less than her male colleague at the next window; rather, it’s that the odds are greater that he will rise to bank manager someday,” it says.

“The wage gap means women need to save more of every dollar they earn to accumulate the same amount of money as men,” says Arielle O’Shea, NerdWallet’s investing and retirement specialist. “That’s difficult to achieve, particularly when women spend more time out of the workforce to raise children or care for family members. Retirement savings may be put on hold during those times, and employer matching dollars are left on the table.”