Women are not as prepared for retirement as men. It’s a trend that has been around for ages, but the COVID-19 pandemic has exacerbated the gap even more, according to TIAA’s just-released Financial Wellness Survey.
The financial services company’s research says that only about a third of women (31%) are saving for retirement, compared to 44% of men. More men–35%–are confident that they are on track to live comfortably in retirement without running out of money, compared to just 19% of women. Comparatively, TIAA points out that in its 2013 survey, the confidence level gap was only nine percentage points.
The picture is even bleaker when it comes to actual retirement savings: 80% of men say that they have saved at least some money for retirement with only 63% of women saying the same. Citing the U.S. Census Bureau’s 2017 Survey of Income and Program Participation, the separation was just 3 percentage points between men and women ages 55 to 66.
“Women now face a greater risk of either not being able to retire or running out of money when they do,” warns Snezana Zlatar, TIAA’s Head of Advice Solutions. “The more this problem grows, the less we can make progress for women and society overall.”
Other financial decisions aren’t helping women prepare for retirement either. Earlier reporting found that more than a quarter (27%) of women took a loan, early withdrawal or a hardship withdrawal from their retirement plan. While they were likely taking advantage of the loosening of penalties brought on by various legislative actions (SECURE Act, CARES Act, etc.), history says that these withdrawals weren’t always well thought out for many.
The ripple effect of the Great Resignation also saw nearly 2 million women leave the workforce since 2020, according to the U.S. Bureau of Labor Statistics. Many women needed to help raise children or care for elderly relatives, but much of their lost earnings and savings will never be recovered.
Not surprisingly, the TIAA survey also found that more women (29%) than men (19%) have trouble paying monthly bills, including utilities, rent, loan payments and credit cards. And while both men and women said they would like to work with financial planners or investment advisors, only 22% of women do, compared to 36% of men, illustrating yet another potential hurdle to financial health women face.
TIAA’s Zlatar says women can help rectify the situation by being proactive and participating in employer-sponsored retirement plans and financial wellness programs. Or contributing to guaranteed lifetime income solutions to help avoid running out of money in retirement.
“It’s particularly urgent that women understand the numerous headwinds they face ahead of retirement so they can take mitigating action as early as possible.”
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
