New Study Finds Women More Likely to End Up Poor Than Men

Women make less money than men and have poorer job choices
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When it comes to saving and spending, the news is not good for women., an online financial rewards program for saving and paying down debt, recently analyzed a representative sample of more than 20,000 of their users' savings and debt balances. The results reveal a sobering reality: Women are more likely than men to be poor during their lifetimes.

If you're surprised, you wouldn't be alone -- the women who took the survey are right there with you. When asked which gender they think is better at saving, more than 73 percent of women said females were.

The SaveUp U.S. Consumer Savings and Debt Report, released on Tuesday, finds that the average man has more in their 401(k), IRA, taxable investment accounts and CDs:
Avg. 401k$50,632$39,320
Avg. IRA$8,456$4,916
Avg. Taxable Investment$72,390$55,668
Avg. Certificate of Deposit$30,374$7,459
Avg. Money Market Investment$11,157$13,225


Not only are men saving more in general, but they are saving more aggressively for retirement-related goals.

Men in the survey have 28.8 percent more than women in their 401(k)s and 72 percent more in their IRAs. The only type of account in which women average a higher balance than men is in a money market account -- a conservative, low-growth investment.

What's Behind the Savings Gap?

The simple answer to the question is "income disparity." According to the American Council on Education, depending on their race and where they live, women make between $0.57 and $0.77 for every dollar men make. This not only makes it harder for women to save than men, but their retirement contributions through their employer will be substantially lower.

Another thing that may be holding women back is student loan debt. Women with student loans in the SaveUp study carried somewhat more debt from higher education than men who had student loans ($41,405 versus $39,104 for men).

Even in planning for the future, women shortchange their goals. According to a 2010 Harris Interactive poll cited by Forbes, when women were asked to put a dollar figure on the amount they were trying to save for retirement, the median was $200,000 compared to the men's median goal of $400,000.

Closing the Gap

One area of money management where women are doing better is in managing what SaveUp calls "non-asset building debt," which includes credit card debt, car loans and lines of credit.

According to the study, the average debt-bearing woman owes $34,645 versus $42,842 owed by the average debt-bearing man. Digging deeper into the debt numbers reveals that men have nearly one-third more in car loan debt than women.

In addition to keeping debt under control women can also improve their balances by increasing the amount they save for retirement. On that note, the picture for women is improving. A study by MassMutual showed that women are gradually increasing their retirement savings. And while in the fourth quarter of 2012 the average account balance for a female was 38.25 percent of the average account balance of a male, that's actually an improvement of 5.6 percent compared to a similar MassMutual study in 2010.

To close the gap between men and women, SaveUp recommends that women:

1. Negotiate for increased wages.
2. Increase their monthly savings goals.
3. Keep unsecured debt low.
4. Invest in higher education and career growth.
5. Increase their exposure to market returns on their long-term savings.

The $849,000 Penalty for Being Born Female
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New Study Finds Women More Likely to End Up Poor Than Men

Women live longer than men by an average of five years. If one needs $3,500 per month (in today's dollars, no less) to cover costs, then that means a woman will need an average of more than $200,000 in extra retirement savings compared to a man purely due to statistical longevity.

Women take more time out of the workforce to raise children, care for sick or elderly parents, and tend to other family matters. Immediately, this results in lost income and depleted savings. For a hypothetical job with a $40,000 annual salary, just two years out of work means she's already $80,000 (minus taxes) in the hole versus her male counterpart. And less time in the workforce leaves women fewer dollars for Social Security, pensions, and other retirement income.

The gender bias also exists in health insurance, where women typically pay 30% more than men in premiums. According to a report cited in The New York Times, "more than 90% of the best-selling health insurance plans charge women more than men." For example, a $300-per-month premium policy for a woman might cost a man $210 per month (30% less). This difference adds up to roughly $44,000 over a lifetime spanning from post-college age to the time one is eligible for Medicare.

Women often get paid less for the same work. In some cases, women get paid 66 cents for every dollar their male counterparts make; for some occupations, this figure is closer to 77 cents per dollar. At best, women receive equal pay for equal work. But a 23% wage penalty due to one's gender -- approximately $10,000 per year over a working life (again assuming a $40,000 annual salary) -- translates into $400,000 over the course of a 40-year career. And those lost dollars could be the difference between being able to save enough for retirement or not.

A woman has a 1-in-2 chance that at some point in her life, she'll need long-term care -- meaning a period of at least 90 days when she requires assistance with activities like dressing, eating and bathing. Those odds are greater than her male counterpart's. And a woman typically spends twice as many years needing long-term care as a man, statistically three years longer. At a national average rate of $3,477 per month for assisted-living long-term care, this equals roughly $125,000.

As if these staggering added costs weren't enough, due to divorce or death of a spouse or partner, 90% of women who at one time had a second household income to help them get by will be left to handle the entire burden on their own later in life.

All of these reasons make it absolutely critical for women to understand money, investing, and personal finance in order to take control of their financial lives.

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