5 min read March 20, 2023
10 ways women can save more and build wealth—despite (very real) challenges

Understanding your unique challenges to a secure retirement can help you invest in yourself as a woman and take steps now to reach your savings goals.

Portrait of cheerful businesswoman smiling at the meeting.

It’s no secret that women face unique challenges to building—and maintaining—wealth.

Over the last few years, the gap in the financial health of men and women has only widened, according to The Gender Gap in Financial Health report, funded by Principal® Foundation and conducted by the Financial Health Network. Women report worse outcomes in all measures of financial health, including spending, saving, borrowing, and planning.

The report also found that women shoulder a disproportionate amount of caregiving responsibilitiesan issue exacerbated by the pandemicand experience a higher rate of income loss as a result of leaving the workforce or reducing hours to fulfill these responsibilities.

Within the workplace, this study adds, women continue to experience discrimination and harassment, significantly hindering their ability to advance their careers, while contending with stubbornly wide pay gaps.

Women who are financially healthy

11 percent of black women

7 percent of Latina women

25 percent of white women

Only 11% of Black women and 7% of Latina women are financially healthy. By contrast, the same figure rises to 25% for white women.1

It will take time to overcome the many systemic obstacles. However, you can take incremental steps to improve your financial health and make real gains.

Here are 10 realistic strategies to consider.

1. Start saving as soon as possible.

Kickstarting retirement savings when you’re young pays big benefits decades down the line.

“Save as much as you can, in as many ways as you can, for as long as you can,” says Heather Winston, financial professional and product director for retirement and income solutions at Principal® . You can set it and forget it with an automated transfer to an individual retirement account (IRA) if your workplace doesn’t have a savings plan.

2. Leave savings alone.

Work breaks, budget challenges, unexpected expenses: Circumstances may make dipping into your retirement savings tempting. But depending on your age, doing so may mean extra taxes and penalties—ultimately setting you back further. Exhaust all other options for emergency cash first.

3. Realistically assess your risk.

In general, women take a more conservative approach to investment risk, and part of that may be because they historically have had fewer assets.2

“Having less wealth naturally means that you want to protect what you have, and so women are often more inclined to caution,” Winston says. “However, if you limit your risk too much, it may dramatically impact growth options and feed into the need to work longer and earn more.”

The goal is to strike a balance between growth and protection. That can mean riding out short-term bumpy markets for long-term gains. Watching your investments dip is unsettling. But pulling out of the market may derail savings and retirement goals more than you may think, as this case study demonstrates.

Not sure what your risk tolerance looks like? Start by taking our investor profile quiz. A financial professional can also help you establish a risk profile just right for you (and we have some tips for choosing one).

Having less wealth naturally means that you want to protect what you have, and so women are often more inclined to caution. However, if you limit your risk too much, it may dramatically impact growth options and feed into the need to work longer and earn more.”

Heather Winston, financial professional and product director for retirement and income solutions

4. Max out savings during your working years.

If your employer offers a retirement savings plan, put in at least enough to get the match (a.k.a., free money). For example, if you save 5% and your employer matches it, you’ve instantly doubled your savings.3

Already maxing out your 401(k) or 403(b)? Consider opening an IRA to save even more.

5. Boost savings before a work break.

If it’s possible you’ll step out of the workforce, ramping up your savings may balance that time out of the office. One idea: Put any merit increases you receive into retirement savings.

“We save and invest so that we can see growth in our assets but, unfortunately, if you have to or want to take a break from work, you’ll feel the impact far into the future,” Winston says. “One workforce interruption may lead to a lifetime of catch-up.”

70% of women with children under 18 report making a career change due to parenting responsibilities, such as reducing their hours, taking a leave of absence, or switching to a less demanding job, compared to 55% of men.1

Bar chart comparing 70 percent of women and 55 percent of men who change career due to parenting responsibilities.

6. Prioritize retirement.

You may have competing needs, such as contributing to college savings for a child, but your disparate savings goals can work together. Earmark even a little budget wiggle room for your own individual retirement account (IRA). Or save a portion of part-time work earnings, too.

Graphic comparing 42 percent of women vs. 53 percent of men

Only 42% of working-age women say they are confident they will have enough money to live off of in retirement, vs. more than half of working-age men (53%).1

7. Prepare for the unexpected.

Life can throw curveballs. But that doesn’t have to upend your finances. Disability insurance and life insurance can help you maintain a stable income when, unexpectedly, you're unable to work—and protects your family if something happens to you.

8. Understand (and negotiate) your value.

Ensure you receive equitable pay by negotiating your salary, especially if today’s fair market value doesn’t reflect your paycheck.

Arm yourself with data. Check company websites for wage transparency insights; online job forums are good for comparing positions, location, and experience compensation. You’re worth it.


the average wages lost due to the wage gap over the course of a woman’s career.4

9. Use catch-up contributions.

If you’re over age 50, you can accelerate retirement savings through what’s known as a catch-up contribution.

10. Claim Social Security as late as possible.

The earliest to claim Social Security is age 62, but it may be worth waiting. Your benefits increase 8% each year until the full retirement age of 70; this is called the delayed retirement credit.

What’s next?

How are you progressing toward your retirement goals? Log in to principal.com to see if you can increase your contributions. Don’t have an employer-sponsored retirement account? We can help you set up your own retirement savings with an IRA or Roth IRA account.

1 The Gender Gap in Financial Health report, funded by Principal Foundation-and conducted by the Financial Health Network, 2022. Data drawn from a nationally representative survey of individuals ages 18–64, conducted November–December 2021.
2 Women as the next wave of growth in US wealth management, McKinsey & Company, 2020.
3 Plan vesting may apply on any match contributions.
4 The Wage Gap: The Who, How, Why, and What to Do, National Women’s Law Center, October 2020.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professionals, and other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

Principal Financial Group Foundation, Inc. ("Principal® Foundation") is a duly recognized 501(c)(3) entity focused on providing philanthropic support to programs that build financial security in the communities where Principal Financial Group, Inc. ("Principal") operates. While Principal Foundation receives funding from Principal, Principal Foundation is a distinct, independent, charitable entity. Principal Foundation does not practice any form of investment advisory services and is not authorized to do so.