How The Gender Wage Gap Makes The Retirement Savings Crisis Worse

Sallie Krawcheck explains why the retirement savings crisis is a women’s issue with risks for the entire economy.

How The Gender Wage Gap Makes The Retirement Savings Crisis Worse
[Photo: Inti St Clair/Getty Images]

The retirement savings crisis in the United States is disproportionately a women’s crisis. That’s because on average, women in this country retire with roughly two-thirds as much money as men, and live some five or more years longer.


As a result, the conventional solutions—raising taxes and cutting entitlements—are far from the only viable tools for bridging the savings shortfall. In fact, closing both the hotly debated gender pay gap and the much-less-discussed gender investing gap are equally crucial. And they have the shared benefit of growing the economy.

I’m the CEO and cofounder of Ellevest, a soon-to-launch digital investment platform for women. And in that capacity, I’m something of a reluctant entrepreneur, having spent the bulk of my career in large companies, turning around troubled businesses. Entrepreneurship simply is not what I do. But becoming an entrepreneur was the best way I could think of to address these issues, which have converged over the course of my own career and will continue to impact those of other professional women until we do something about it.

Inside The Investment Gap

For starters, keeping women in the workforce longer and closing the gender pay gap are both crucial undertakings. And it’s true that making progress on each of them goes some way towards closing the retirement savings gap as well. The more money women earn, the more they can pay into their 401ks and Social Security accounts over longer periods and at higher levels. Initiatives like Lean In and Know Your Value, among others, are doing great work on that important front.

But the gender investing gap gets comparatively little attention. Men invest to a greater degree than women, and that’s in part because the investments industry as a whole (which I know pretty well, having run Smith Barney and Merrill Lynch Wealth Management) does a great job for men.


My experience has been that that it does a much worse job for women. Financial advisers lose their core clients (read middle-aged white men) at a rate of less then 2% a year. They lose the widows of these gentlemen at a rate of more than 70% in the year after her spouse’s death. And while there are a number of financial advisers who do an exceptional job for many women, the numbers overall are what they are.

Hurdles And Opportunities

So what can we do?

My first step in trying to answer that question–having been a big-company gal–was to meet with a big-company CEO to talk about it. Over breakfast with one such gentleman, I explained the problem and the opportunity, including the $5 trillion in investable assets that women solely control, not to mention that 90% of women are directly responsible for their money at some point in their lives.

He listened attentively, nodding. When I was done with my breathless relaying of the facts, he paused thoughtfully, looked off into the middle distance, and said, “Sallie, that is so interesting. But don’t their husbands manage their money for them?”


He hadn’t even heard me. Strike 1.

I met with another big-time CEO. His response: “I think we need to create an alternative investment for women. You know, like a private equity fund.”

Huh? Let’s be real: Many women simply don’t have the financial means or motivation to invest, and private equity’s traditional products won’t directly solve this crisis. Strike 2.

A third CEO: “We already have a marketing program around women. Just like we do for other niche markets.”

More than 50% of the population is a niche market? Strike 3.

There were actually a few more strikes. But what became clear in all of this is that the established companies weren’t seeing either the problem or the opportunity it represented. And for those who did see it, they weren’t going to address it in a way that I thought made sense.


Ask any entrepreneur, and chances are they’ll also tell you that reaching this point is when they knew they had to go their own way. In my opinion, investing needs a top-to-bottom, research-driven rethink when it comes to wealth, opportunity, independence, and security for women.

The Limits Of “For-Women” Approaches

But, I’ll be honest–it still took me a while to reach that conclusion.

Typically, my reaction to “for-women” businesses has been to bristle a bit. Many companies—especially in the financial sector—have tended to adopt a “pink-it-and-shrink-it” approach to female clients. They’re heavy on “financial education” of the remedial kind. This is despite the research that shows that women are as good, or better investors, than men across the spectrum, whether as hedge fund investors, mutual fund investors, or individual investors.

The further I dug into the research on the issue, the more convinced I became that by bringing the right people together and attacking the issue in a strategic, data-driven way, we actually stand a shot at solving this puzzle.


Because the reality is that the gender disparity in investment and retirement savings isn’t just an issue for women—even though it’s that, too. The more prosperous, independent professional women there are in the workforce, the better off the entire economy becomes. Certainly, closing the wage gap is critical, but it isn’t the only gender gap that matters.

Related: Sallie Krawcheck On The Benefits Of Investing In Women


About the author

Sallie Krawcheck’s professional mission is to help women reach their financial and professional goals. She is the CEO and cofounder of Ellevest, a digital investment platform for women