Retire at 65? Probably not in the cards, according to more than 4 in 10 working women.
Indeed, 41% report they expect to retire at age 70 or older or do not plan to retire at all, according to Emerging from the COVID-19 Pandemic: Women’s Health, Money, and Retirement Preparations, a study released this week by nonprofit Transamerica Center for Retirement Studies (TCRS) in collaboration with Transamerica Institute.
“Women are at even greater risk than men of not achieving a financially secure retirement due to societal headwinds including the persistency of the gender pay gap, time out of the workforce for parenting and caregiving, and less access to employer and government benefits,” said Catherine Collinson, CEO and president of Transamerica Institute and TCRS. “Emerging from the pandemic, we must spotlight women’s longevity and their retirement insecurities. Now is the time to implement solutions so that all women can retire with dignity.”
As part of TCRS’ 22nd Annual Retirement Survey, the new study examines the retirement outlook of women workers and includes recommendations for women, employers, and policymakers to improve retirement security. The survey, one of the largest and longest running of its kind, was conducted in late 2021 among employed workers of for-profit companies.
The financial fragility of women workers
“Women workers have weathered a financial storm amid the pandemic. Many experienced negative employment impacts that could jeopardize both their short-term finances and future retirement,” Collinson said. The survey findings illustrate the financial challenges faced by women workers:
- 37% experienced one or more negative impacts to their employment as a result of the pandemic,including reduced work hours (21%), reduced salaries (13%), furloughs (11%), and layoffs (11%).
- More than four in 10 women workers are having trouble making ends meet (44%), while 57% feel they do not have enough income to save for retirement.
- 58% cite paying off some form of debt as a financial priority. Other financial priorities include saving for retirement (50%), building emergency savings (38%), and just getting by to cover basic living expenses (31%).
- Emergency savings are low. Women have only $2,000 (median) in emergency savings. Emergency savings increase with age: Generation Z women have saved $500, Millennials have saved $1,400, Generation X has saved $3,000, and Baby Boomers have saved $7,000 (medians).
- 38% are either currently serving or have served as a caregiver in the past for a relative or friend during their working career (excluding parenting responsibilities). Eighty-four percent of them adjusted their employment situation, including missing days of work (35%), reducing hours (25%), quitting a job (10%), and foregoing a promotion (7%).
Women’s risky retirement outlook
“Women’s current financial challenges often undermine their long-term retirement confidence. Most women also worry about the future of government retirement benefits,” Collinson said. Only 21% of women workersare “very” confident they will be able to fully retire with a comfortable lifestyle, and only 24% “strongly” agree they are building a large enough retirement nest egg. Seventy-six percent are concerned that Social Security will not be there for them when they are ready to retire.
The survey findings further illustrate women’s risky retirement outlook:
- 28% of women workers expect to rely on Social Security as their primary source of income in retirement, while 45% expect to rely on self-funded savings from 401k/403b/IRAs and or other savings and investments, and 16% expect to rely on income from working.
- 69% are offered a 401k or similar plan by their employers, including 75% of those working full-time, but only 47% who work part-time.
- Almost three in four are saving for retirement (73%) through employer-sponsored plans and/or outside the workplace. Among women who are saving, they started saving at age 29 (median).
- 81% who plan to work past age 65 or do not plan to retire cite financial reasons for doing so, while almost as many (77%) cite healthy aging-related reasons.
- Household retirement savings are alarmingly low. Women workers have saved only $43,000 (estimated median) in all household retirement accounts. Retirement savings increase with age: Generation Z women have saved $26,000, Millennials have saved $29,000, Generation X has saved $51,000, and Baby Boomers have saved $101,000 (estimated medians).
How to improve women’s retirement security
“Fostering women’s financial security requires a collaboration among stakeholders including policymakers, employers, and individuals to tackle deeply rooted issues and modernize our retirement system for current and future generations,” Collinson said. Each of these stakeholders could take additional steps, including:
- Policymakers can implement reforms to Social Security and Medicare to ensure their sustainability. Additionally, policymakers can implement further reforms to expand access to workplace retirement plans, increase incentives for employers to offer plans, and facilitate retirement savings among women.
- Employers can ensure gender pay equity. They can expand their retirement, and health and welfare benefits offerings for all employees, including both full-time and part-time workers. They can also offer flexible work arrangements, which can help all employees with work-life balance and potentially enable them to stay in the workforce amid competing demands.
- Women can take greater control over their future by gaining a full understanding of their situation, creating a financial plan, setting goals, factoring financial implications of taking time out of the workforce, and developing a retirement strategy.
“Women’s ability to achieve a secure retirement ultimately depends on equitable pay throughout their working years; access to retirement, and health and welfare benefits; and the preservation of safety nets such as Social Security and Medicare,” Collinson said. “As we emerge from the pandemic, we have an unprecedented opportunity to bridge gender inequalities during a woman’s working years and her retirement.”
SEE ALSO:
• Recession Fears Not Stopping Women from Maintaining (or Increasing) 401k Contributions
• What’s the Top (Current) Financial Concern for Women?
• Stark Differences in How Men, Women Prioritize Financial Goals
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
