When it comes to savings, it appears there’s a growing gender disparity. Recent findings by Bank of America show that women’s HSA (Health Savings Accounts) balances are, on average, 15% lower than men’s. This might not seem like a significant difference initially, but considering women tend to live about five years longer than men, this gap becomes even more crucial.

The Savings Gap – A Deeper Dive

After analyzing 565,000 HSAs, Bank of America noticed some distinct utilization trends. Women, in comparison to men, not only have lesser HSA balances but also tend to spend their savings before retirement and, alarmingly, contribute less to these accounts. To put it in perspective, in 2022 alone, men’s net HSA savings averaged $128 more than women’s. This differential compounds year over year.

HSAs aren’t just regular savings accounts. They’re designed to let employees stash away money on a pre-tax basis annually. These funds can grow over time, be invested in various mediums, and be withdrawn tax-free for medical expenses, making them a significant retirement savings tool. Despite its potential, this tool is underutilized, especially by women.

The Larger Picture

Lisa Margeson from Bank of America offers insights on why women lag behind in their HSA contributions. Factors such as the persistent gender pay gap, which means women on average earn only 83 cents to a man’s dollar, combined with career interruptions like caregiving, contribute to this disparity. In fact, the National Bureau of Economic Research reported that women spend 40% more time than men in childcare.

Generational data is even more revealing. The percentage of women contributing to HSAs drops significantly from Gen Z to millennials, from 83% to 70%. This drop is possibly due to millennials beginning families and either reducing or even withdrawing their contributions to meet immediate financial needs.

Bridging the Gap

Margeson emphasizes the need for employers to play a proactive role. By educating employees about the benefits and potential of HSAs and providing contributions and caregiving benefits, they can ensure that women have the resources and knowledge to save effectively.

For women, the mantra is clear: Start your HSAs early, even if the contributions are small. Over time, consider investing those funds, maximizing the growth potential. Those wary of high-deductible health plans can consider other savings vehicles like emergency or interest-bearing savings accounts to supplement their retirement plans.

In Conclusion

The gender disparity in HSAs is a reflection of broader socio-economic factors, but with the right strategies and awareness, women can navigate these challenges effectively. As Margeson aptly concludes, “The important thing is to save. Just start, even if it’s a little bit, and try not to touch it. In the end, if you need it, it will be there for you.”