A recent Transamerica study found a large and pervasive gender gap when it comes to preparing for retirement. On average, Transamerica found, women have only about a third of the retirement savings that men do. This is true even though women tend to live much longer in retirement than men do – and because women tend to marry younger, they are significantly more likely to outlive their spouses. It’s therefore even more critical for women to invest in self-directed IRAs, 401(k)s, IRAs, SEPs and take advantage of every opportunity they can to boost investment and savings.

Some highlights from the Transamerica survey:

• Men have more than triple the household retirement savings than women. Men report having saved an estimated median of $115,000 compared to just $34,000 among women. Men (33 percent) are also twice as likely as women (16 percent) to say that they have saved $250,000 or more in total household retirement accounts.
  
• Working men (62 percent) are more likely than working women (51 percent) to say saving for retirement is a financial priority right now. Working women (53 percent) are more likely than men (36 percent) to say “just getting by – covering basic living expenses” is a current financial priority.
• Men are nearly twice as likely as women – 19 to 10 percent – to report being ‘very confident’ in their ability to comfortably retire.
• A large majority of workers are saving for retirement through an employer-sponsored plan and/or outside of work, men are more likely (80 percent) than women (72 percent) to be saving. In terms of the median age they started saving, men started saving at a younger age (age 26) compared to women (age 28).
• Self-funded savings including retirement accounts (e.g., 401(k)s, 403(b)s, IRAs) and other savings and investments are the most frequently cited source of retirement income expected by workers, including 77 percent of women and 78 percent of men.
• Many workers are “guessing” their retirement savings needs. Women (56 percent) are more likely than men (40 percent) to say that they “guessed.” Fewer than one in ten women and men say they have used a retirement calculator to estimate their needs.

It’s clear from the data that women are lagging behind men when it comes to long-term financial security. What can women do to close the gap?

Here are some ideas – with which we heartily concur:

1. Start now. When you can start making compound interest work for you instead of against you, then every day you delay represents a lost opportunity – not just for accruing interest and potential returns, but an opportunity to build positive financial habits, such as paying yourself first and living on less than you make.

2. Open an IRA or self-directed IRA. Both allow you to set aside up to $5,500 per year for your retirement, on a tax-advantaged basis. If you are age 50 or older, you can contribute another $1,000 per year. Self-directed IRAs allow you to pursue non-traditional retirement assets and alternative asset classes while still preserving the tax advantages of an IRA. If you are a real estate enthusiast, you may wish to consider a self-directed IRA.

3. Boost returns. Over time, women tend to earn lower returns on their investments than men. This is because women tend to gravitate toward lower-return investments than men, seeking safety rather than growth. This is a perfectly fine approach as you near your retirement years. But when you have a decade or more before you need to retire, you might consider taking on a bit more risk as you seek a greater return. That is, if you have the time to recover from temporary market downturns, a bumpy 10 percent return is better than a smooth 6 percent.

4. Slash fees. Many investors are vastly overpaying financial services companies, paying excessive fees like asset under management fees (AUM fees), high fund expense ratios, back-end charges, and hidden fees. Consider switching to index funds, or moving self-directed or alternative assets to a menu-based, flat fee system that can save thousands on larger accounts.