Retirement planning for women: Closing the gender retirement gap

Women often retire having navigated a different financial path than men — longer lifespans, lower lifetime earnings, and more time spent caring for others. These factors influence the retirement gap, but they also point to where planning can make the biggest difference.

Let's take a closer look at three of the biggest challenges women face in retirement, and the steps that can help address them. 

Challenge #1: Retirement confidence gap women face   

More than half of the women, 50 to 64, are not confident about retirement or whether their money will last.¹ And the concern is well founded: research shows the median retirement income for women is an estimated 30% lower than for men.² This uncertainty can be destabilizing when you're trying to plan for the years ahead.  

Confidence takes time to build and recognizing that the gap exists is an essential first step toward closing it. 

 

Challenge #2: How the gender wage gap compounds over time 

Women in the U.S. typically earn 81 cents for every dollar earned by men.³ The gap is wider for many women of color: compared with white, non-Hispanic men, Black women are typically paid 63 cents, Latina women 54 cents, and Native American women 53 cents. Over a career, that difference adds up: men earn about 24% more in total income, which directly affects how much accumulates in a 401(k).4

Image content row block image

Although a 401(k) is only part of the equation, your individual contribution is key lever you control, capturing your full employer match and increasing contribution rates over time can recover meaningful ground. 

 

Challenge #3: How short career breaks affect women's retirement savings 

Career interruptions also affect women disproportionately. Breaks taken to care for children, aging parents, or both can have a lasting effect on a woman's retirement. Time out of the workforce can mean missed contributions to employer-sponsored retirement plans, along with fewer promotions and smaller raises over time.  

Time away from work can also reduce eventual Social Security payments, which are calculated based on your highest-earning years. Knowing this early gives you room to plan for it: whether that's contributing during working years, coordinating benefits with a spouse, or timing when you draw Social Security.

 

 

One more factor: Cost of longevity 

Women live, on average, about five years longer than men.⁵ That's five additional years of expenses (healthcare, housing, and daily costs) that retirement income needs to cover. The combination of lower lifetime earnings and a longer retirement window is exactly why building income you can't outlive belongs in the plan from the start. 

What you can do: Strategies for closing the gap  

Understanding these challenges is only useful if you can act on them. Here are three options to consider as you plan for retirement:

  • Spousal IRAs allow a non-working spouse to keep saving for retirement, and can be a helpful option if you step away from work to focus on family. 
  • Catch-up contributions let you accelerate your savings as you approach retirement age.
  • Fixed index annuities can help protect your principal from market volatility while providing a source of guaranteed income for life. 

Knowing your options helps you make informed decisions and feel more confident about your financial future. 

This material is for informational purposes only, and is not a recommendation to buy, sell, hold or rollover any asset.  It does not take into account the specific financial circumstances, investment objectives, risk tolerance, or need of any specific person.  In providing this information American Equity Investment Life Insurance Company is not acting as your fiduciary as defined by the Department of Labor.  American Equity does not offer legal, investment or tax advice or make recommendations regarding insurance or investment products.  Please consult a qualified professional. 

 

Sources 

  1. AARP, 2026.  
    1. Financial Woes Weigh on Older Women More Than Men
  2. U.S. Department of the Treasury, 2024.  
    1. Spotlighting Women’s Retirement Security | U.S. Department of the Treasury
  3. USAFacts, 2026.
    1. "What is the gender pay gap in the US? | USAFacts
  4. Pew Research Center, 2023.
    1. The Gender Wage Gap Endures in the U.S. | Pew Research Center
  5. Centers for Disease Control and Prevention, 2024
    1. https://www.cdc.gov/nchs/pressroom/releases/20260129.html  

Explore insights & information

Successful Retirement Budgeting: How To Reach Goals and Avoid Income Gaps

Retirement is an individual process that involves outside factors like retirement age, the income prior to retirement, and even location. The more factors in the equation the more complicated it can get. But it doesn’t have to be overwhelming. We break down some of the most important things you need to know so you can potentially avoid common issues and obstacles in retirement planning.

10 Facts About Fixed Index Annuities

Calculating how much money you will need for retirement and understanding different products and their benefits are important for your financial wellbeing. Fixed index annuities are an option many Americans consider including in their retirement planning toolbox. We answer frequently asked questions to help better understand how fixed index annuities work.

American Equity Named One of Newsweek’s Most Trustworthy Companies in America for Fourth Consecutive Year

For the third year in a row, we at American Equity Investment Life Insurance Company® are proud to be recognized as one of Newsweek’s Most Trustworthy Companies in America. This recognition supports our commitment to providing retirement products and services that empower people to strive for a fulfilling retirement.

View all articles