• June 12, 2024
  • Posted by General Electric Credit Union
  • 6 read

Mothers in the US Face a Retirement Savings Shortfall

Finances play a crucial role in aging with dignity. And though US women are more educated than ever before—a factor that typically correlates with a higher salary—many don’t feel confident in their retirement savings. Only about 20% of mothers ages 50-64 have more than $100,000 saved, compared to over 40% of fathers in the same age group.1 Mothers face several unique challenges when it comes to stowing away funds for their golden years. This guide explores those challenges and offers some strategies to help moms prepare for their futures with confidence.  

The gender pay gap 

In two-thirds of US families with children, both parents work.2 However, despite strides toward gender equality in the workplace, a persistent wage gap continues to affect women. To understand the gender pay gap, it’s important to look at how it’s measured. The uncontrolled gap represents overall difference in pay, not factoring in differences like job titles or industry. The controlled gap takes more into account, including: 

  • Education level
  • Hours worked
  • Experience
  • Industry
  • Job title and level 

A woman in 1982 earned 65 cents for every dollar a man earned.3 Compare this to the controlled wage gap for 2023—99 cents for every dollar, a 1.01% difference—and it’s clear to see the gap is closing.4 However, it’s important to understand the impact that 1.01% still has. For someone making $70,000, that’s an additional $707 a year! The disparity increases for certain job titles. For example, women in executive-level positions make 95 cents for every dollar earned by their male counterparts.

Every little bit helps when it comes to saving for retirement. According to Fidelity, even saving 1% more—less than the controlled gender pay gap—can make a big difference.5 They provide an example of a 25-year-old who makes $40,000. Increasing their retirement saving contribution by 1% would only cost them $33 a month, but it would gain them an additional $3,970 in retirement.5

Career interruptions

Through the Family and Medical Leave Act (FMLA), eligible employees can take up to 12 weeks of unpaid leave in a 12-month period. This leave is job-protected and must be for specified family or medical reasons. Paid leave is a different story. Only 24% of employees in the private sector workforce have access to paid family leave.6 While the pay an employee can expect during this leave differs from company to company, it’s rarely 100% of their regular salary.  

On average, maternity leaves are also three times longer than paternity leaves,7 resulting in longer periods of reduced income that impact a woman's ability to save for retirement. With a portion of a woman’s salary replaced or reduced during leave, contributions to retirement accounts diminish, slowing the growth of those retirement savings. Over time, this interruption in savings can compound, leading to a substantial shortfall in retirement funds. 

Career breaks can also impact retirement income strategies. Social Security benefits are calculated based on a person's average earnings over their working years. With fewer years of work or lower earnings during breaks, the average lifetime earnings decrease, resulting in reduced Social Security benefits at retirement. 


In Ohio, the average cost of infant care is $9,697 a year—$808 a month.8 The U.S. Department of Health and Human Services (HHS) says “affordable childcare” should only take up 7% or less of a family’s income. In Ohio, it takes up nearly 17% of the median family’s household income.8

The Buckeye State isn’t alone, as childcare is expensive across the country. Some parents do the math and find the cost rivals one parent’s income, which may lead to the decision for one to stay home to care for the kids. In fact, nearly a quarter of American mothers stayed at home in 2023. That’s a 15% yearly increase motivated in part by the cost of care.  

While this shift gives mothers more time with their children, it can have a negative effect on their financial future. Without an income, contributions to retirement accounts like 401(k)s or IRAs diminish or cease entirely, causing the stay-at-home parent to miss out on potential employer matches or compound interest growth. 


The COVID-19 pandemic imposed unprecedented challenges on working parents. Widespread closures of schools and childcare facilities required many to adapt, and those who were able to work remotely often found it incompatible with full-time caregiving. Juggling professional responsibilities while supervising children's education and well-being became untenable for some. 

Nearly half of working mothers reported taking unpaid sick leave because their child’s school or daycare was closed.10 Additionally, mothers of school-age children ages 6-12 had the steepest decline in employment rates and are recovering at a slower rate.11

Regardless of why a mom takes a career break, returning to work can be challenging. Many stay-at-home parents face questions about gaps on their resume during the hiring process. Unfortunately, this can sometimes turn into biases that are difficult to navigate.  

Life expectancy 

The average life expectancy in the US is about 75 for men and 80 for women.12 As a result, women require more savings to support themselves over a longer retirement period. This includes living expenses, health care, and other needs. Without a robust retirement savings strategy, women risk financial insecurity in their later years. 

Empowering moms for retirement

1. Start early

The power of compound interest can’t be overstated. Even modest contributions to a retirement savings account early in one's career can yield substantial growth over time. The gender pay gap is improving, but women can still advocate for equal pay by calling attention to their experience and what they bring to the table. 

2. Maximize retirement accounts

For mothers who have access to employer-sponsored retirement plans, such as 401(k) or 403(b) accounts, maximizing contributions can significantly boost savings. Some employers match contributions up to a certain percentage, effectively doubling the impact of the employee's savings.

There are options for stay-at-home parents, too! One is a spousal IRA, which allows a non-working spouse to contribute to an IRA based on the working spouse's income. This enables these parents to build their retirement savings while they perform labor in the home.  

3. Consult a financial advisor 

Everyone faces unique challenges in life that may impact their retirement plan. For mothers in the US, those may include a wage gap in their field of work, lack of saving options due to their employment status, and a longer life expectancy. A financial advisor can help women create a robust retirement plan that takes these factors into account. They’ll guide them toward the saving options, investment strategies, and retirement income solutions that are ideal for them. 

Women in the US have experienced significant improvements in their ability to save for retirement over the past few decades. Though, some barriers persist and should be accounted for as they plan for the future. General Electric Credit Union (GECU) strives to Improve the Quality of Financial Lives for all members by providing benefit-rich accounts and services, free resources, and helpful guidance for every stage of life. An Investment Services financial advisor, available through CUSO Financial Services, L.P. (CFS),13 can also help women get the ball rolling on a retirement plan. 

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