Inflation and market volatility are impacting retirement accounts for all investors, and especially women, according to a new study from Goldman Sachs Asset Management.
More than 60% of women surveyed reported retiring earlier than initially planned, and two-thirds of the group said it was for reasons outside of their control, such as health concerns (29%), taking care of family (16%), or their job becoming “unavailable” (15%).
Even though women are expected to live longer than men, Goldman Sachs found that 58% of retired women receive 50% or less of their pre-retirement income—which includes Social Security—relative to 44% of men. Only a small portion of women (20%) reached 70% of their pre-retirement income, compared to 30% of men.
Of working women, half said their retirement savings are behind schedule, with 24% reporting their savings as “very behind.” This is relative to 35% of men who believe their savings are delayed, and 14% who reported it as long overdue.
Similarly, working women were less confident that they would achieve their retirement saving goals: just 14% of women said they were “very confident,” compared to 27% of men. Instead, 33% of women reported concern that they will not be able to meet their retirement goals, versus 19% of men.
Even though more women were reported to manage their own retirement savings (69%) compared to men (63%), women were more likely to express stress or anxiety in doing so (63%), relative to men (52%).
Time out of work contributes to less savings overtime
The Goldman Sachs study highlights how working women are more likely than their male counterparts to stop working due to several factors, including caregiving needs.
“Women more often than men are forced to work part-time, spend time out of the workforce to care for young children and elderly family members, and juggle other financial priorities during their careers,” said Candice Tse, global head of Strategic Advisory Solutions at Goldman Sachs Asset Management. “This can make their journey to retirement more difficult and incredibly personal.”
Time out of workforce due to caregiving needs has long been a societal headwind for women, both in their careers and out. A recent Transamerica Center for Retirement Studies (TCRS) study found 38% of women are either currently serving or have served as a caregiver during their working career.
Even during the COVID-19 pandemic did women experience crashes to their career. According to TCRS, 37% experienced one or more negative impacts to their employment because of the pandemic, including reduced work hours (21%), reduced salaries (13%), furloughs (11%), and layoffs (11%).
“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,” said Catherine Collinson, CEO and president of Transamerica Institute and TCRS, in a recent interview with 401k Specialist.
Key topics for financial advisors to consider
Longevity and generating retirement income reigned as leading concerns for women in the Goldman Sachs findings. Women were more inclined to report concern with “leaving a steady paycheck” in their careers than men (48% versus 38%).
Topics for which women responded that they wanted guidance or advice included understanding how long savings would last (34%), how to adjust retirement saving if it’s not on track (33%), retirement saving strategy (e.g., how much to save) (32%) and generating retirement income (32%).
Despite added complexity in managing retirement savings over their careers, women were less likely than men to use outside resources for help (e.g., employer programs, financial advisors). Yet, more women (46%) considered it very or extremely important to receive financial advice (relative to 40% of men). Family members were the top source of this advice for women.
“The difference in utilization of these resources highlights the gap in retirement advisors being able to meet women where they are,” said Chris Ceder, senior retirement strategist at Goldman Sachs Asset Management. “Personalized saving and investing strategies can enhance confidence in long-term success, particularly for women.”
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