Makin' Money

Who’s saving more for retirement?

Chris Farrell Nov 29, 2011

Numbers seem solid and data accurate. But numbers and data are tricky. That’s why it always pays to look more closely at the underlying figures. 

The flaw of averages is among my favorite examples for highlighting putting too much trust in numbers. There’s the old saw about the statistician who drowns crossing a river that on average was 3 feet deep. A real world example is the stock market. On average, the stock market returns nearly 11 percent a year. Right! Looked at your retirement savings plan lately? The market has gone through some frightening bear markets and spectacular booms along the way to achieving that average return.

Here’s an intriguing example of the payoff from looking more closely at the data. It has to do with retirement savings. It’s well known that male workers have a higher level of retirement plan participation than females. But do they? 

Yes, among wage and salary workers ages 21 to 64, men had a higher participation level than women. But when the measure is full-time, full-year workers, women had a higher percentage participating than men — 55.5 percent for women compared with 53.8 percent for men.

According to the Employee Benefit Research Institute (EBRI), the trend holds across all levels of earnings. The proportion of women participating in a retirement savings plan was the same or higher than it was for males at each earnings level.  

What accounts for the difference? The EBRI researchers guesstimate that women’s lower retirement plan participation rate in the aggregate stems from their overall lower earnings and lower rates of participation in the full-time workforce compared to men. 

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