401k Fail? Women Pre-Retirees Worse Off than a Generation Ago

Since early 1990s, overall debt has doubled for women in their 50s

How can 401k female participants became more financially secure?How can 401k female participants became more financially secure?

Women 401k participants in their 50s are more “financially fragile” than they were just one generation ago, according to research from the George Washington University Global Financial Literacy Excellence Center.

Among the findings:

  • Since the early 1990s, overall debt has doubled for women in their 50s.
  • The percentage of 50-something women with less than $25,000 in savings has also doubled.
  • Women in their 50s are more likely to have mortgage debt totaling more than half the value of their homes.
  • Women in their 50s are delaying retirement because of higher levels of debt, including student debt, and higher rates of marital disruption such as divorce or widowhood.

“There are many real and complicated factors contributing to 50-something women’s sense of financial insecurity today,” Carla Dearing, CEO of SUM180, an online financial planning service, said when commenting on the research. “No matter the cause, however, it is time for the financial services industry to zero in on how it is failing women in general and contributing to the financial insecurity of women in this age group in particular.”

The findings match the results of a recent survey of American workers by the Transamerica Center for Retirement Studies. It revealed that 46 of women are either “not too confident” or “not at all confident” in their ability to retire with a comfortable lifestyle, compared with 36 percent of men; only 12 percent of women are “very confident” in their ability to fully retire with a comfortable lifestyle.

The findings also reveal that just a little over a third of female respondents reported using a professional financial advisor. Among female respondents who provided an estimate of their retirement savings needs, 62 percent reported they “guessed.”

“Given the financial challenges they face, 50-something women, as a group, arguably could benefit the most from the services of a financial advisor,” Dearing concluded. “The fact that they are not reaching out for that help suggests that the industry’s approach to this demographic is flawed.”

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