For Women, A Serious Crisis of Retirement
The Transamerica Center for Retirement Studies has uncovered the dramatic fact that nearly half of women (48 percent) do not actually have any retirement strategy at all, despite the fact that 56 percent of women expect to self fund their retirement through 401(k)s, retirement accounts, or other savings and investments.
The Center’s latest study, “Juggling Current Priorities and Long-Term Security: Every Woman Needs Her Own Retirement Strategy,” sheds light on women’s attitudes and behaviors related to saving and planning for retirement, and offers details about how they compare to their male counterparts.
“There is a striking disconnect among women between how they envision their retirement and how they are preparing to realize that vision,” said Catherine Collinson, president of the Transamerica Center for Retirement Studies. “Women face a number of unique circumstances, such as typically lower wages than men, time out of the workforce to be a parent or caregiver and a longer life expectancy, which present challenges for saving. As a society, we must do more to empower and equip women with the know-how to plan, save, and ultimately achieve a secure retirement.”
Today’s Working Woman: Her Views of Retirement
The study found that women’s retirement dreams include traveling, spending more time with family and friends, and pursuing hobbies; however, the majority of women (53 percent) plan to retire after age 65 or do not plan to retire. And the majority (53 percent) plan to continue working after they retire, including 45 percent of women who plan to work part-time and eight percent who plan to work full-time. Most of these women will do so for reasons related to income or health benefits.
Women’s expectations of delaying retirement and/or working in retirement illustrate a serious crisis of retirement confidence. More than half of women (54 percent) are “not too confident” or “not at all confident,” compared to only 44 percent of men who share that sentiment. Only seven percent of women are “very confident” in their ability to fully retire with a comfortable lifestyle.
Part of what may be fueling this lack of retirement confidence is a lifelong concern about taking care of family. Women most frequently cite their single greatest retirement fear (26 percent) as not being able to meet the financial needs of their family. More than one in four women (28 percent) expect to take time or have already taken time out of the workforce to act as caregiver for a child or aging parent. Of these caregivers, 73 percent believe that this time out will impact their ability to save for retirement. Further, many reported that their retirement may involve financial caregiving; one in three women (31 percent) expects that when they are retired, they will need to provide financial support for a family member other than their spouse.
Juggling Current Priorities and Long-Term Security
The study found that only one in five women (20 percent) said that “saving for retirement” is their greatest financial priority compared to the majority of women (55 percent) who are focused on current priorities such as paying off consumer debt (e.g., credit card) or just getting by to cover basic living expenses.
Often due to family responsibilities, women are far more likely to work part-time (45 percent) than men (24 percent). For women, working part-time translates into lower income and reduced access to benefits, including retirement benefits. Slightly more than half of women (58 percent) who work part-time reported having access to a 401(k) or similar plan, while the vast majority (83 percent) of women who work full-time have access to such a plan.
When women do have access to workplace retirement benefits such as 401(k)s, nearly three in four (74 percent) participate. Women’s annual contribution rate, as a percentage of salary, is six percent (median), an amount that is likely insufficient for meeting long-term retirement needs. An alarming 22 percent of women are “not sure” how their savings are invested.
Illustration: US Department of Labor's article, Taking the Mystery Out of Retirement Planning
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