Diligent saving by middle-aged women is beginning to narrow the pension gender gap, but women are still drastically behind men in saving for retirement, according to a just-released analysis of consumer finance data.
"Women are better off, but they are still pretty bad off," says Vickie L. Bajtelsmit, assistant professor of finance at Colorado State University and co-author of the study.
On average, women have saved just 44 cents for every dollar that men have saved in defined contribution pensions or individual retirement accounts. That's an improvement from where women were roughly a decade ago, when they had socked away only 40 cents for every dollar that men had in such plans.
But it's still likely to be far shy of what they need. Because women live longer, they need considerably more in retirement savings than men. The bottom line: Women are still far more likely than men to end up impoverished when they're old.
Still, there are some signs of improvement on several fronts, says Bajtelsmit, who draws her conclusions from analyzing the Federal Reserve Board's survey of consumer finances, an exhaustive study that's done once every three years. The latest consumer finance study, covering 1998, was released in January 2000. Bajtelsmit examined whether women with full-time jobs were making any progress on retirement savings.
The findings:
* Forty-five percent of employed women participated in a pension or retirement plan at work in 1998, compared with 43% in 1989. Men's pension participation declined modestly to 52% from 53%.
* The percentage of women covered by so-called "traditional" pensions, which offer set monthly payments for life, declined to 16% in 1998 from 28% in 1989. However, the percentage covered by defined contribution plans--the type of pension that offers no monthly income guarantees but pays out what you (and your employer) pay in, plus investment earnings--jumped to 33% from 23%. The trends with men's pensions were similar, but men were more likely to be covered by all types of pensions. Some 19% of men are covered by traditional pensions, while 40% are covered by defined contribution plans.
* Women of all ages are investing more aggressively--a positive sign. But they still invest more conservatively than their male counterparts. In 1998, only 20% of women said their assets were predominately in bonds, which pose less investment risk, but provide lackluster long-term returns, compared to 32% invested mainly in bonds in 1989. Notably, only 14% of men invested primarily in bonds in 1998, but 31% of men said they invested primarily in bonds in 1989.
