{"id":9179,"date":"2022-03-27T07:48:57","date_gmt":"2022-03-27T11:48:57","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=9179"},"modified":"2022-03-27T07:49:31","modified_gmt":"2022-03-27T11:49:31","slug":"young-women-are-saving-for-their-retirement-sooner-than-past-generations","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=9179","title":{"rendered":"Young women are saving for their retirement sooner than past generations"},"content":{"rendered":"
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My niece, Shannon, opened a Roth IRA when she was 19. Last year, at 23, after graduating from Duke University and landing her first post-college position, she immediately signed up for her employer\u2019s Roth 401(k).<\/p>\n<\/header>\n<\/header>\n

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That\u2019s my girl.<\/p>\n

The average age women in Shannon\u2019s age cohort between 18 and 35 open a retirement account is 20, according to Fidelity Investments\u2019 new 2022 Money Moves Study<\/a> of 2,015 American adults 18 and older who have investment accounts.<\/p>\n

That\u2019s 14 years younger <\/em>than the average age women 36 and over reported opening their first retirement account. And, boy, do those women who delayed wish they could have a do over. More than a third of the older women (36%) said they regret they waited too long to start saving for retirement, according to the findings.<\/p>\n

We want to hear from you! Tell us your work and retirement questions or concerns by emailing <\/em><\/strong>yahoomoney@yahooinc.com<\/em><\/strong><\/a><\/p>\n

Younger women are also starting to invest outside of retirement accounts earlier than their older counterparts, according to the study. More on this shortly.<\/p>\n

\u201cIt\u2019s no secret that the pandemic has had a disproportionate impact on women,\u201d Lorna Kapusta<\/a>, Fidelity\u2019s head of women investors and customer engagement, told me in an interview this week. \u201cWhat\u2019s surprising is just how much these events have served as a catalyst for young women to make their finances a priority.\u201d<\/p>\n

Read on Yahoo Money<\/a><\/strong><\/p>\n

These findings are notable for these young women\u2019s future financial security.<\/strong><\/p>\n

\u201cSince women are more likely than men to live longer, with a statistically good chance of living into their mid-90s, they need to build a retirement nest egg that can last,\u201d Kapusta said, \u201crequiring women to plan differently.\u201d<\/p>\n

Automatic 401(k) plans are a catalyst to saving at a younger age<\/strong><\/h2>\n

This is quite an about-face from the findings that Merrill Lynch and Age Wave found four years ago in their study <\/a>\u201cWomen and Financial Wellness: Beyond the Bottom Line.\u201d<\/p>\n

\u201cSixty-one percent of women would rather talk about their own death than money,\u201d said Maddy Dychtwald, co-founder of Age Wave.<\/p>\n

In that report, less than half (45%) of millennial women said they were confident in investing and about 63% of women ages 18 to 29 said \u201cfinancial planning is too difficult to even think about,\u201d Dychtwald said.<\/p>\n

Other headwinds hit women, too. Women hold two-thirds of America\u2019s student loan debt, according to a report from the American Association of University Women<\/a> (AAUW).<\/p>\n

There’s also the gender pay gap, which fortunately is moving in the right direction for many younger women. In 2020, women ages 25 to 34 earned 93 cents for every dollar a man in the same age group, according to the Pew Research Center. <\/a>In 1980, women ages 25 to 34 earned 33 cents less than their male counterparts.<\/p>\n

And these new findings from Fidelity give me hope. One reason I believe that young women are setting aside retirement funds earlier than they did when I was starting out i<\/a>s that an increasing number of employers now automatically enroll new employees in their 401(k) plans.<\/p>\n

Sixty-two percent of 401(k) plans now use an automatic enrollment feature, according to a recent survey<\/a> released in December by the Plan Sponsor Council of America (PSCA), a nonprofit trade association. And for the first time, the most common default deferral rate is now 6% of pay rather than the 3% of pay that has been the norm since 2006.<\/p>\n

Automatic enrollment simply makes saving easier. Almost a quarter (23%) of women on Fidelity\u2019s 401(k) platform were automatically enrolled in their company\u2019s 401(k) retirement savings plan, according to Kapusta.<\/p>\n

Younger women are investing earlier<\/h2>\n

I\u2019m over the moon that younger women have started to stash away for retirement younger than I ever dreamed of doing. Establishing a savings habit is our ballast.<\/p>\n

These younger women are also investing outside<\/em> of their retirement account with half reporting they started to do so in the past six months.<\/p>\n

On average, young women began investing in a brokerage account at 21, according to the findings. Older women didn\u2019t start investing in their own brokerage account until they were 30, on average. For me, it was 32.<\/p>\n

Underlying these encouraging findings is what appears to be a major culture shift.<\/p>\n

\u201cMore women are talking about money and investing,\u201d Kapusta said. \u201cIt\u2019s getting less and less taboo, especially among this younger generation.\u201d<\/p>\n

And consider this: The study found that 1 in 3 young women noted that their parents talked to them about the importance of investing for their futures when they were young. That\u2019s a huge change from the women I grew up with who universally tell me that managing money was rarely discussed in their families \u2013 at least with them.<\/p>\n

But I\u2019ll take it. Out with the old, in with the new.<\/p>\n

\"\"<\/a>by Kerry Hannon<\/a><\/span><\/strong><\/p>\n

\u00b7<\/span>Senior Columnist<\/strong><\/div>\n

Kerry is a Senior Columnist and Senior Reporter at Yahoo Money. Follow her on Twitter<\/em> @kerryhannon<\/em><\/a><\/p>\n

\"Yahoo<\/p>\n

Read the latest personal finance trends and news from Yahoo Money.<\/strong><\/a><\/p>\n

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