Men Have 43% More Money in Their 401(k)s Than Women, Data Shows

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There’s a disparity between men’s and women’s 401(k) balances. Read on to see why it exists and what you can do about it. 

It’s important to have money in an IRA or 401(k) going into retirement. Social Security will replace less than half of your paycheck if you’re an average earner, and most seniors need to replace more income than that to live comfortably.

Meanwhile, recent data from Vanguard shows that the average 401(k) balance among male savers is $136,977. However, the average 401(k) balance among women is only $95,570.

That difference isn’t so surprising, though. Payscale reports that in 2023, for each $1 men make, women only earn $0.83. And to be clear, the gender pay gap is nothing new. For years, women have statistically earned considerably less than their male counterparts. And lower salaries are very likely to translate to lower 401(k) balances.

But that doesn’t mean that if you’re a woman, you’re doomed to lag behind your male counterparts in the retirement savings department. Instead, there are steps you can take to catch up or get ahead.

Snag your full employer match

Many employers who sponsor 401(k) plans also match worker contributions to some degree. It pays to get the details of your employer match and contribute enough to your 401(k) so as not to miss out on a dime of it.

Let’s imagine your company is willing to match 100% of your 401(k) contributions each year up to $3,000. This means that putting in $3,000 from your own earnings gets you a total 401(k) contribution of $6,000 for the year.

Remember, too, that the money your employer gives you in your 401(k) can be invested for added growth. A $3,000 contribution from your employer today might grow into $20,000 over 20 years if your 401(k) is invested at an average annual 10% return, which is consistent with the stock market’s average return over the past 50 years.

Invest your retirement savings aggressively

Some people opt to play it safe with their 401(k)s because they don’t want to see their balances go down. But investing too conservatively could stunt your 401(k)’s growth. So a better bet is to invest your money in mutual funds, index funds, and other assets that are likely to deliver strong returns, even if there’s some risk involved. Generating strong returns is a great way to grow your 401(k).

Imagine you contribute $300 a month to your 401(k) over 30 years, all the while enjoying the 10% return referred to above. You’d be putting in $108,000 of your earnings all in. But you might end up with a balance of around $592,000. That’s about 5.5 times the amount of money you put in yourself.

It may be disheartening to see that men have more money in their 401(k) plans than women. But that doesn’t mean you can’t take steps to grow your balance nicely — and build a nest egg that could set the stage for a very rewarding retirement.

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