Fidelity's key insights for women on retirement planning

[WORLD] When it comes to retirement planning, women often face unique challenges and opportunities. Women tend to live longer than men, earn less over their lifetimes, and may take career breaks to raise children or care for family members. This can result in significant gaps in their retirement savings. However, there are ways to address these challenges effectively. Fidelity, one of the leading investment firms, has revealed surprising insights to help women make smarter decisions about their retirement savings, particularly through IRAs (Individual Retirement Accounts) and 401(k) plans.

The Gender Retirement Gap: A Growing Concern

According to Fidelity, the gender retirement gap remains a critical issue. On average, women save less for retirement than men. This gap exists because women typically earn lower wages and may take time out of the workforce to care for children or aging relatives. On top of that, women often live longer, meaning they need to save more to cover a longer retirement period.

Fidelity's insights focus on empowering women to close this gap and build stronger financial futures. One of the most crucial pieces of advice is for women to start saving as early as possible. “Starting early and saving regularly is key to building the retirement security you need,” says one of Fidelity’s top financial advisors.

The Importance of IRAs and 401(k)s

IRAs and 401(k)s are two of the most popular and effective retirement savings vehicles. IRAs allow individuals to save for retirement on a tax-deferred basis, while 401(k) plans are employer-sponsored retirement plans that come with the added benefit of employer matching contributions.

For women, these accounts are vital tools for addressing the retirement gap. Women who utilize these accounts can benefit from tax savings, compounded growth, and the ability to contribute more over time. But there are some important nuances in how women should approach these options.

1. Maximize 401(k) Contributions: Take Full Advantage of Employer Matching

One of the most powerful strategies women can use is maximizing their 401(k) contributions, especially if their employer offers a matching program. Fidelity emphasizes the importance of contributing enough to get the full employer match because it’s essentially free money.

“If your employer offers a match, make sure you contribute at least enough to get the full match,” says a Fidelity spokesperson. “It’s one of the simplest and most effective ways to boost your retirement savings.”

In 2025, the contribution limit for 401(k) plans is $23,000 for individuals under 50 and $30,500 for those 50 and older. Taking advantage of these limits can significantly increase a woman’s retirement savings over time. Fidelity suggests reviewing your contribution amount annually and adjusting it if possible to ensure you are saving as much as you can.

2. Consider the Power of an IRA for Additional Flexibility

While 401(k)s are great, many women find that IRAs can offer additional flexibility in terms of investment options. Fidelity highlights that IRAs allow investors to choose from a wider range of investments, including stocks, bonds, and mutual funds, which can help maximize returns based on personal risk tolerance.

There are two main types of IRAs: Traditional IRAs and Roth IRAs. Traditional IRAs offer tax-deferred growth, meaning you don’t pay taxes on the money you contribute until you withdraw it in retirement. Roth IRAs, on the other hand, allow you to contribute after-tax money, but your withdrawals in retirement are tax-free.

“Roth IRAs can be especially beneficial for women who are early in their careers and may expect to be in a higher tax bracket in retirement,” explains the Fidelity advisor. “If you can contribute to a Roth IRA, it’s a great way to ensure tax-free growth and withdrawals down the line.”

3. The Impact of Life Changes on Retirement Planning

Life events such as marriage, divorce, or the birth of children can dramatically alter retirement savings plans. Women, who are often the primary caregivers in families, may take breaks from the workforce or work part-time jobs, which can reduce their ability to save for retirement.

Fidelity's surprising insight here is that women should prioritize understanding how these life changes impact their retirement savings early on and take proactive steps to mitigate the effects. For example, after having children or taking a career break, women should consider “catch-up contributions” if they’re over the age of 50.

These contributions allow women to save more in their retirement accounts. In 2025, individuals over 50 can contribute an additional $7,500 to their 401(k) and $1,000 to their IRA.

“We know that women are more likely to take career breaks, but that shouldn’t mean they have to compromise on retirement,” says Fidelity’s financial expert. “The key is to find ways to boost savings when possible, especially after life events.”

4. The Need for Ongoing Financial Education

One of the most surprising insights from Fidelity is the importance of ongoing financial education. According to a Fidelity survey, women are more likely to underestimate how much they need to save for retirement and are less confident in their investment knowledge than men.

“To truly close the retirement gap, women need to invest in their financial education,” says Fidelity’s spokesperson. “We’ve seen that those who take the time to educate themselves about investments and retirement planning feel more confident in their ability to achieve their financial goals.”

Fidelity offers a wide range of resources, including online tools, retirement calculators, and workshops, all aimed at helping women become more knowledgeable about managing their retirement savings. Whether you’re a seasoned investor or just starting, there’s always something new to learn.

5. Prioritize Retirement Savings Over Debt Repayment

While paying off debt is essential for overall financial health, Fidelity advises that women should prioritize retirement savings over aggressively paying down non-essential debt. This is especially true for younger women who may have time on their side.

“Paying off high-interest debt like credit card debt is crucial, but once that’s under control, it’s important to shift focus to saving for retirement,” advises Fidelity’s expert. “The sooner you start saving, the more time your money has to grow.”

Compounding interest is one of the greatest forces in building wealth, so getting started early can make a significant difference in the long run.

Fidelity’s surprising insights for women on IRAs, 401(k)s, and retirement planning offer a roadmap for building a secure financial future. By maximizing contributions, taking full advantage of employer matches, using IRAs for tax-advantaged growth, and staying informed about financial strategies, women can close the retirement gap and secure their financial independence.

Remember, retirement planning doesn’t have to be intimidating. Whether you're just starting out or nearing retirement, there are steps you can take today to build a brighter future. With the right tools and a proactive approach, women can not only catch up but thrive in retirement.