Women May Want to Consider Opening a Solo 401k Plan to Improve Saving for Retirement

A survey published by T. Rowe Price found that women are saving significantly less than men for retirement, so a solo 401k plan may be a good way to bridge this savings gap.

Here are some findings from the survey:

  • Baby boomer women have a median 401(k) savings balance of $59,000, while baby boomer men have median 401(k) savings balance of $138,000.
  • Millennial women have a median 401(k) balance that is $30,000 less than the median balance of millennial men.
  • As for  median income, women earn about $27,000 less than men, so this may be a contributor factor. Women are deferring less of their income to their 401(k)s when compared to men.
  • Women also don’t use other retirement accounts as much as man, with 10% saying they use other vehicles compared to the 32% of men.
  • Retirement Expectations. Women are more likely to believe they will have to reduce their standard of living in retirement (46%) compared to men (37%). Further, nearly half of men believe they will live as well or better in retirement compared to when they were working, compared to one-third of women who expressed that sentiment.
  • Life in Retirement. Significantly more women are single or widowed once in retirement compared to men: Within the first five to 10 years of retirement, 33% of women respondents were either widowed or divorced compared to 17% of men, and after 11 years, the number of single or divorced women increased to 45%, while the number of men barely changed at 18%.
  • Financial Advice. Both men and women cited ease of use as their most favored attribute for financial advice. However, women place more importance on advice that fits into their work or personal schedule, as opposed to men who place more importance on advice that alerts them to critical developments in their accounts.

In sum, both men and women can use a solo 401k to help save for retirement, and many do. We have found that about 20% or our solo 4o1k clients not only contribute to their solo 401k pan but also their full-time job 401k plan as well as IRAs.  In order to qualify  for a solo 401k plan, you have to be self-employed with no full-time W-2 employees. Also, contributions to the solo 401k plan are based on net earned income from the self-employed business not from your day-time job W-2 income.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>


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