The battle to close the economic gender gap extends beyond workplace wages to retirement savings. According to T. Rowe Price, women are making lower contributions to their retirement accounts and had lower balances overall, with the median 401(k) balance for women being a whopping 65% less than their male counterparts. While some factors—like antiquated gender roles—demand systematic change beyond the financial services industry, firms can take steps to better support female participants by working to improve financial literacy among women, providing inclusive inputs for retirement readiness tools and offering a balanced suite of education content and practical tools within the participant site.

Inclusive inputs for key tools can help women better prepare for retirement

One reason for this retirement disparity can be found in the “motherhood penalty,” a term coined for the economic and social cost of maternity leave, including the loss of income, ineligibility for employer contribution matches and reduced social security benefits. The Covid-19 pandemic only further this phenomenon, with women leaving the workforce in large numbers. A disruption to income and workplace benefits can be detrimental for an individual’s retirement savings. For women, who live longer and likely need to save more for retirement, this interruption can be deadly. The Journal of the American Medical Association (JAMA) recently published a study that on average, women outlive men by nearly six years. Longer life expectancy, combined with the increased likelihood of leaving the workforce early, translates to an extended retirement for women—and a higher savings target goal. Tailoring the participant site to reflect the diverse needs of participants—by gender, age and employment status—can help bridge the retirement readiness gap between men and women.

Gender not only influences a participant’s needs in retirement, but also how they engage with the participant site. Corporate Insight’s 2023 Participant Engagement and Preferences survey (subscription required) found that women tend to value educational resources more than men, as well as significantly more likely to have engaged with a financial wellness assessment and retirement project tool. Conversely, men were more likely to use educational resources than women, but less likely to explore tools with high-interaction costs, like multistep assessments and projection tools with extensive inputs. This suggests that as opposed to strict information gathering, women are more willing to engage with resources that can provide a holistic, personalized assessment of their finances. In addition, women, who are usually tasked with the dual-burden of caregiving and earning an income, may find practical tools like retirement projections, financial wellness resources and personal capital features to be particularly valuable.

One way firms can better prepare both men and women for retirement is by providing expansive inputs within key site features and tools, like retirement readiness projections. Among the coverage set, John Hancock’s approach to their projection tool stands out. With an expansive array of dynamic inputs across five tabs—Contributions, Profile, Health, Other Income and Retirement—participants receive a detailed comparison between their estimated monthly expenses and income in retirement. Notably, the Profile section allows participants to identify a bevy of personal information, including Ethnicity, Education, Occupation and Gender. With gender as the sole variable, the retirement projections pictured below reveal the male participant has a retirement readiness score of 171% compared to the female participant’s score of 158%, reflecting the additional hurdles women face to prepare for retirement.

This screenshot shows the different results in John Hancock's calculator for male and female retiree projections
John Hancock Retirement Projection for Male (Left) and Female (Right)


Targeted educational content and calculators can improve low financial literacy and confidence among women

Worryingly low levels of financial literacy, too, contribute to the gender gap. Research led by Lila Rabinovich, the Director of Policy and Development with the Center for Economic and Social Research at University of Southern California, shows that women are less financially literate than men, regardless of education, income or marital status. This disparity only grows more severe for minority groups.

The results of CI’s September 2023 survey measuring financial literacy further support this trend, finding the female students not only had a lower financial literacy baseline compared to men, but they also expressed a lower level of financial confidence. Among college students, only 52% of women reported that they felt they knew enough to achieve their financial goals. In contrast, 61% of men reported being confident in their financial literacy to achieve their goals. Among high school students, financial confidence was roughly equal between both genders. Meanwhile, for both high school and college students, women scored lower on a five-question financial literacy assessment. For female college students, 64% answered less than half of the question correctly, compared to 56% percent of men. Similarly, T. Rowe Price found that female respondents were 40% less likely than men to feel confident about their retirement. Despite advancing their education levels, financial confidence among female students dropped, suggesting the gender gap in financial literacy may find its roots in larger sociological factors, such as the expectation on women to be breadwinners and caregivers.

While CI’s Participant Preferences survey found women less likely to engage with educational content, women’s high-value perception of educational tools suggests that firms may be able to spark engagement with more targeted content. Fidelity provides a great example of what kinds of resources firms can provide to help participants prepare and budget for major life events. Meanwhile, TIAA stands out for their targeted educational content about the unique obstacles women face on the road to retirement. Firms that combine these approaches—practical tools with informative resources—can address low levels of financial literacy while simultaneously encouraging participant engagement.

In addition to a robust educational library, Fidelity notably offers a calculator that assess the cost of leaving the workforce to be a full-time caregiver. Given the disproportionate burden women face to be caregivers—often at the cost of their professional careers—tools like this are key for supporting women as they navigate complex financial situations, such as prolonged maternity leave. Importantly, this blends reader-friendly explanatory text with useful expense estimates, turning a cost-estimator tool into a teaching opportunity.

A screenshot showing the Fidelity Cost of Leaving the workforce calculator results
Fidelity Cost of Leaving the Workforce Calculator – Results


A screenshot showing the Fidelity cost of leaving the workforce calculator
Fidelity The Cost of Leaving the Workforce Calculator – Inputs

TIAA takes a more targeted approach with a dedicated microsite on women’s retirement inequality that features testimonies, key metrics about the retirement gap and multimedia content about saving and budgeting. Dedicated content like this can not only improve overall financial confidence for women, but also inform participants about hurdles they may not have considered in their retirement plan. Moreover, the use of testimonies and multimedia content can provide essential emotional support for participants trying to navigate major life events and upheavals, like childcare.

This screenshot shows TIAA's microsite for women in retirement
TIAA Retiring Inequality Microsite Page Example

John Hancock, TIAA and Fidelity represent three effective approaches to closing the gender gap in retirement. While the retirement savings gap between men and women demands attention, it is important to acknowledge that this conversation can—and should—extend to participants of other gender identities, too. Already, firms are taking steps to become more inclusive across the industry. Dynamic inputs that reflect individuality and tailored educational content are just two ways that plan sponsors can continue to prepare employees for retirement. To keep up with the industry’s latest innovations, learn more about to CI’s Retirement and Workplace Finance subscription research services.