The 40% Retirement Wealth Gap: Why women need to invest more for their future

A growing financial shift is underway in India, with more women entering the investment ecosystem than ever before. However, even with such increased participation, a substantial disparity still remains in terms of wealth accumulated for retirement purposes, with men having about 40 per cent more wealth than their female counterparts.

Speaking with Zee Business, financial experts Mrin Agarwal, CEO of Finsafe and Prathiba Girish, Founder at Finwise Personal Finance Services, decoded emerging trends in women’s investing behaviour and the urgent need for stronger financial planning among women.

Rising participation, but the gap remains

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According to Mrin Agarwal, there has been a clear positive shift in women’s investment behaviour over the years. “Women have started investing more, especially in the last two to three years,” she noted, adding that financial independence has become a key motivation rather than just family security.

Citing data, she pointed out that nearly one-fourth of mutual fund folios now belong to women investors, and women are increasingly engaging in conversations around wealth creation and financial freedom.

However, she also highlighted a critical social concern: financial security for women can quickly weaken during life disruptions such as divorce, widowhood, or career breaks, often leaving them financially vulnerable.

Changing women investment behaviour

Prathiba Girish emphasised that women investors are gradually moving away from traditional savings habits. “We are seeing a clear shift from conservative fixed-income preferences to equity-oriented investments,” she said.

She noted that younger women investors are increasingly opting for equity mutual funds while reducing exposure to debt instruments. Over the last five years, women’s allocation to debt has dropped significantly, while equity participation has risen sharply.

Key changes highlighted include:

• Debt investment allocation from 30 per cent to 9 per cent
• Equity investment allocation from 40 per cent to 65 per cent
• Portfolios made up of almost 85 per cent equity and hybrid assets

In spite of this trend, she emphasised that women continue to fall behind in building wealth because of their comparatively lower earnings, interruptions in careers, and other obligations such as childcare.

Awareness vs actual investment

A detailed report discussed during the conversation—“Unlocking Her Wealth” by EY and Lxme—revealed a striking gap between awareness and action.

Agarwal explained that while awareness is growing, conversion into actual investing remains low:

Approximately half of all women have heard about mutual funds and stocks
On the other hand, only 15 per cent actually invest in mutual funds and stocks
However, when it comes to investing in gold, 88 per cent are aware of it and 36 per cent intend to invest in it

Investment Trends: Women vs Men

She also highlighted that women tend to start investing later than men. On average:

Women tend to start investing in mutual funds at age 35, while men do so at 30
Women’s investment size in mutual funds is around 50 per cent less than that of men
Average SIP Investment – Rs 6,000 to 6,500 by women and Rs 12,000 by men

According to her, these differences compound over time, significantly impacting retirement wealth accumulation.

The 40% retirement gap

One of the most concerning findings discussed was the 40 per cent retirement wealth gap between men and women. Experts attributed this to a combination of lower earnings, fewer working years, and higher caregiving responsibilities among women.

Agarwal explained that women’s lifetime savings are reduced not only because they earn less on average, but also because they often pause careers or work fewer years. “This translates into a significant retirement shortfall,” she said, calling it a “critical concern for long-term financial independence.”

Gold, equity, and traditional habits

While women are increasingly investing in equities and mutual funds, gold continues to dominate household investment portfolios. Agarwal noted that gold allocation in Indian households remains high at around 15 per cent, often leaving less room for equity-based wealth creation.

She also pointed out rising interest in the National Pension System (NPS) due to tax benefits, alongside mutual funds as preferred market-linked products.

Building financial independence

Girish emphasised the importance of financial freedom in influencing confidence and decisions in life. Girish recommended that women move from conservative investments into diversified portfolios by first investing in hybrid schemes and then eventually going for equity schemes.

Meanwhile, Agarwal emphasised that financial freedom should be the ultimate goal. “Financial independence is as important as physical health,” she said, adding that structured financial planning is essential in today’s uncertain economic environment.

She also cautioned against over-reliance on gold and traditional savings instruments, recommending higher equity allocation for long-term wealth creation.

What women need to invest more for their future?

Experts unanimously agreed that bridging the retirement wealth gap requires urgent action. Financial literacy, early investing, and structured planning were identified as key pillars for change.

“Equity exposure must increase if wealth creation is the goal,” Agarwal concluded, stressing that women should actively engage in financial decision-making rather than sticking to the usual family investment strategy.

In light of India’s changing financial environment, one thing is clear: women are increasingly becoming investors, yet the retirement wealth gap will only worsen if quicker and better financial decisions are not made.