Ladies, you’ve got this.
Usually when you hear the words “retirement” and “women” in the same sentence, the news is grim. But finally, there’s some positive news: The number of women who’ve reached the $1 million-plus mark in their 401(k) accounts has doubled over the last 12 years, according to Fidelity figures provided to The New York Times.
Even more impressive? Women actually reach the milestone faster than men do, at an average age of 58½ versus 59.3.
Stereotypes about women being more risk averse than men didn’t ring true in the research. Among Fidelity’s 401(k) millionaires who earn less than $150,000, the sexes had similar investing habits; women hold about 77% of their nest egg in stocks, versus 76% for men. And both had similar rates of return and had saved for approximately the same amount of time, about 30 years.
So what’s behind these women’s retirement success? They’re putting away a higher percentage of their pay. Women in that same income demographic are saving an average of 18.1% of their salaries and receiving a 6.8% employer match, which means that the equivalent of nearly a quarter of their income is going toward retirement each year. That total for men, including the match, is at 22.8%. (This, despite the fact that these women earn a lower average salary than men — $117,000 versus $118,800.)
These stats should give us all some motivation to kick up a notch that 401(k) contribution we may have put on the back burner. What baby steps can you take now that could make a big difference down the line? Here are a few suggestions.
Contribute at least enough to get an employer match. The study shows how much of a difference that company match makes. If you’re not saving at least enough of your income to take advantage of this employee perk, you’re leaving money on the table.
Try to up your contribution by even a tiny bit. It’s easy to set your 401(k) contribution when you start a job and forget it. But try to revisit that percentage periodically; benefits season could be a good trigger to remind you to do it every year. Even a 1% to 2% boost will help.
Up your contribution whenever you get a raise. Expecting a promotion soon? Congrats — now think about diverting a portion of that raise to retirement. For instance, if you’re expecting your salary to go up by 5% next year, why not raise your contribution by 5%, too?
Send some of your bonus money to retirement. If a year-end bonus is on its way, earmark some of it for retirement before you use it up to pay for your big ski vacation. It’ll be a win-win.