May 3, 2012

Women and Retirement: Still Not Ready

Overall, women are less engaged and have less saved than male investors

That women are less prepared for a secure retirement than men is well-reported. A survey released Thursday by ING Retirement Research Institute digs into various women’s segments to see how pervasive the problem is.

Women's savings as a percentage of men'sMen have nearly $150,000 saved on average, compared with women who have just $108,000, according to the report, "What About Women (and Retirement)?" Similar percentages of men and women contribute to their employer-sponsored retirement account (73% of women compared to 77% of men), but 55% of women are contributing to another account as well, compared with 61% of men.

Both genders report barriers to saving like not enough income or too much debt, but women are more likely to say they don’t save because they don’t know what their options are. Single women are especially likely to say this, while divorced or widowed women are more likely to claim low income or high debt as their primary barrier to saving.

Just 36% of women have ever calculated how much they’ll need in retirement, compared with 49% of men, and while only a third of men have a formal plan to reach their retirement goals, even fewer women have one (25%).

Looking at different segments of women investors, mothers have even less saved than women overall, with just $88,000. Over half of mothers have less than $25,000 saved in their retirement plans and less than two-thirds are taking full advantage of their employer’s company match. By comparison, 76% of fathers take their company’s full match.

Almost 70% of single women rely on their own research or input from their family and friends for financial guidance. Married women are only slightly less likely to do so (63%), but they are more likely to work with a financial professional (31%) than single women (21%). While half of men have calculated how much they’ll need for retirement, just 28% of single women have.

“There isn’t much difference between segments of women, but compared with men, women have less saved and are less engaged than men,” Delia deLisser, director of women’s marketing for ING, told AdvisorOne.

Delia deLisser, ING Retirement Research InstituteThe goal of the report, deLisser (left) says, is to give advisors information they can share with their clients that will make them aware of the challenges they face. “Women have greater needs,” deLisser says, “and need to be engaged and proactive.”

One way advisors can do this is by outlining challenges their female clients face and increase the sense of urgency they feel in saving for retirement, deLisser says.

“Women think of wealth in terms of provided a secure future for themselves,” she says. “Advisors should listen and focus on what’s most important to the client.” If they meet with their female clients and their husbands together, advisors should make sure her questions are answered.

“Mothers are more challenged for savings and time pressure,” deLisser says. It may be helpful for advisors who work with women who have children at home to compare their savings to that of other women. “Advisors need to trigger them to get engaged,” she says.

The second most told story after the boomer story, deLisser says, is that of younger investors, regardless of gender, and the danger their retirement is in. “Gen Y women and men have more debt and a tougher job market,” deLisser says. “It’s harder for them to save, and the reality is they’ll likely have fewer safety nets. Social Security benefits will potentially be lower and health care costs will be higher. They have longer to save and the sooner, the better.”

DeLisser encourages advisors who work with young clients, especially young women, to view their first job as an opportunity to start contributing to their retirement. “They have the benefit of time,” she says, “so they should make saving a habit.” Young investors need to build their retirement contributions into their budget so it doesn’t feel like lost income. They should also increase their contribution every time they get a raise. “That way, they can adapt as their income grows.”

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