10 alarming facts about women and retirement risks

Only one in ten are "very confident" that they will be able to retire comfortably

Women continue to lag behind men in terms of saving and planning for retirement. (Photo: iStock) Women continue to lag behind men in terms of saving and planning for retirement. (Photo: iStock)

As of 2017, women have made tremendous strides in closing the gender gap. However, the fact that a gender gap exists, led the Transamerica Center for Retirement Studies (TCRS) to examine the factors that cause women to become uniquely vulnerable in planning for retirement.

"Today's women are better educated and enjoy career opportunities that our grandmothers' generation could only dream about,” says Catherine Collinson, president of TCRS. “Nevertheless, women continue to encounter challenges including lower pay, time out of the workforce for parenting or caregiving, and longer life expectancies that all contribute to unique challenges in adequately saving for retirement.”

The 2017 study marks the 12th consecutive year that TCRS research showed women are at a greater risk of not achieving a financially secure retirement compared to men.

Related: Being a woman will cost you $430,480 over your working lifetime

“Women continue to lag behind men in terms of saving and planning for retirement,” says Collinson. “It it is even more concerning that women statistically tend to live longer than men, thereby implying an even greater need for savings and preparations.”

TCRS releases the study at an opportune time. March is National Women’s History month and March 8 is International Women’s Day. Collinson says: “The goal of our research and outreach regarding women and retirement is two-fold: 1) to raise awareness of the retirement risks that women are facing, and 2) highlight opportunities where women can take greater control of their long-term financial security.”

Findings from the TCRS national survey of working women highlight that few have a high level of confidence about their future retirement. Only one in ten are "very confident" that they will be able to retire comfortably. At the same time, more than half are "guessing" at the amount they will need to save in order to feel secure in retirement. 

Household retirement savings is $34,000 (estimated median) and more than two-thirds indicate that they have no back-up plan if forced into retirement sooner than expected. Four out of five are concerned that Social Security will not be available to them when they are ready to retire.

Related: Yet another gender gap: key facts about women in 3 infographics

"The facts are startling and clear. women must begin taking greater control and gain an understanding of their true retirement outlook," says Collinson. "By confronting challenges head-on, women can acquire essential knowledge about how to achieve financial security and create plans that can help mitigate risks and steer them on a course for financial security and a more positive outlook for their retirement ambitions." 

On the following pages, you will find ten facts that TCRS found about women and retirement that are aimed to raise awareness of retirement risks that women face:

 low retirement confidence

Retirement confidence remains low for women compared to men. (Photo: Thinkstock)

Fact No. 1: Retirement confidence is low

Only 10 percent of women are “very confident” in their ability to fully retire with a comfortable lifestyle, compared to 19 percent of men. Nearly half of women (45 percent) are “not too confident” or “not at all confident” compared to only 32 percent of men who share those sentiments.

Fact No. 2: Many expect to retire after age 65 or not at all

Fifty-three percent of women plan to retire after age 65 (40 percent) or do not plan to retire (13 percent), a similar percentage to that of men (54 percent). One in four women expects to retire at age 65, and 22 percent expect to do so before age 65.

women in the workplaceWomen plan to continue to work into retirement to bridge savings shortfalls. (Photo: iStock)

 

Fact No. 3: Half plan to work in retirement

Half of women (50 percent) plan to work after they retire, including 11 percent who plan to work full-time and 39 percent who plan to work part-time. Similarly, 52 percent of men plan to work after they retire, including 15 percent full-time and 37 percent part-time. Continuing to work in retirement can help bridge a savings shortfall; however, it may not be a viable option without taking proactive steps to allow for continued employment in retirement.

Fact No. 4: Women take fewer proactive steps than men

A majority of women are taking proactive steps to help ensure they can continue working past age 65. Sixty-two percent are staying healthy, while 54 percent are performing well at their current job and 42 percent are keeping their job skills up to date. However, responses were lower for networking (16 percent of women, 22 percent of men), scoping out the employment market (16 percent women, 18 percent men), and going back to school (12 percent both women and men). All in all, 91 percent of women have taken at least one of the six steps identified. More than half (55 percent) have taken at least two steps, 33 percent three steps, 14 percent four steps, six percent five steps – but only two percent of women have taken all six steps.

women in business

Most women say they lack a plan b if retire sooner than expected. (Photo: iStock)

Fact No. 5: Most lack a backup plan if forced into retirement

An alarmingly low percentage of women (19 percent) and men (31 percent) have a backup plan if forced into retirement sooner than expected. While delaying retirement and taking proactive steps to enable continued employment during retirement, it is vitally important to have a backup plan if forced into retirement sooner than expected (for example, due to a job loss, health issues, family obligations). 

Fact No. 6: Women start saving later than men

Seventy-two percent of women are saving for retirement through employer-sponsored plans (e.g., 401(k) or similar plans) and/or outside the workplace (e.g., in IRAs or mutual funds), compared to 80 percent of men. Women retirement investors started saving for retirement at age 28 (median), while men investors got an earlier start at age 26 (median).

 Women and work life balance

Roughly 1 out of every 4 women work part-time in retirement compared to 14 percent of men. (Photo: iStock)

Fact No. 7: Women are less likely offered retirement benefits

One in four women (26 percent) work part-time compared to only 14 percent of men. This strongly influences women’s access to retirement benefits in the workplace because part-time workers overall are less likely to be offered a plan. Forty-two percent of women part-timers are offered a 401(k) or similar plan compared to 77 percent of women full-timers.

Fact No. 8: Many plan to self-fund their retirement

Nearly half of women (47 percent) expect to self-fund their retirement primarily through 401(k)/403(b) accounts/IRAs (36 percent) or other savings and investments (11 percent). Twenty-seven percent of women expect Social Security to be their primary source of retirement income, compared to 23 percent of men. Fourteen percent of women expect income from working to be their primary source of income in retirement. 

Women and the retirement problemWomen estimate they will need $500,000 in retirement.. (Photo: iStock)

Fact No. 9: Many women guess their retirement savings needs

Statistically, women live longer than men and, therefore, need to save more to support their extended post-work, retirement years. Women estimate that they will need to have saved $500,000 (median) to feel financially secure when they retire. Among those who estimated their savings needs, 56 percent of women say they “guessed” at what the figure should be and only eight percent said they had used a calculator or completed a worksheet. Men are far less likely to have guessed (40 percent) and more likely to have used a calculator or completed a worksheet (16 percent).

Fact No. 10: Most participate in a 401(k) or similar plan, if offered one

Among those offered a 401(k) or similar plan, women’s participation rate lags that of men (75 percent and 79 percent, respectively), with women contributing only 6 percent (median) of their annual salary compared to men contributing 10 percent. Only 61 percent of women who work part-time who are offered a 401(k) or similar plan participate in the plan, albeit at a higher median contribution rate of 10 percent, compared to 6 percent for women who work full-time.

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