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What women want: Personalized retirement planning

By Lisa DeSimone

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As plan sponsors help motivate participants to save in employer-sponsored retirement programs, they should consider their employees’ savings mindsets and behaviors. Employers must take into consideration how employee preference can affect savings patterns. This is especially true as it relates to gender. A recent study of female plan participants offers insights to how women take action and engage in their employer-sponsored retirement plans[1]. This gender analysis explores how women think about retirement, including how and when they engage in the retirement planning process.

Emotional and intellectual influences on saving for the future

When women think about retirement planning, certain thoughts and feelings are more influential than others. Men tend to rely more heavily on intellectual influencers, such as hard facts and previous experience. According to new research, hope and fear – emotional influencers – play a larger role among women. In fact, women tend to be more concerned than they are optimistic about retirement issues including:

  • Paying for day-to-day expenses
  • Converting savings to retirement income
  • Maintaining lifestyle in retirement
  • Saving enough to retire

Because emotions influence how women save and where they invest, retirement plan providers and sponsors should be empathetic to investment-related concerns and proactively address them, while helping turn female participants’ hopes into specific investment goals. Organizations should avoid fear tactics, and instead focus on optimistic, action-oriented messages. Once organizations have a better idea of how women feel about saving for retirement, they can then begin to understand how they make decisions to save.

Low engagement levels inhibit success

Very few women are fully engaged in their retirement plans and this can be attributed to the fact that many rely on their partners to be the decision-makers. Low engagement can also be the result of relying on a partner to be more involved with retirement planning. Among participants who are married or living with partners, only 35% of these women say they are the “primary decision-maker” when it comes to saving, compared to 53% of men.

Engagement is a personal experience. Plan sponsors must remember to put the person — woman or man — first in their retirement plan efforts. Plan sponsors can do this by demonstrating how a specific plan’s capabilities align to practical needs. Sponsors’ communication and education programs should address participants’ concerns and provide ways to help them to achieve their goals. If possible, sponsors should offer couples’ planning seminars and provide other resources to help engage women and their partners in the savings process.

The power of one-on-one communication

The majority of women prefer in-person, face-to-face communication. Ideally, they’d like for those communications to be one-on-one, but they’re also interested in group sessions. Women want to be able to see, hear from and ask questions of a person who is experienced, qualified and knowledgeable about retirement planning.

Relationships and interpersonal dialogue may help women overcome the hesitation that holds many of them back from taking action in their retirement plans. Rather than relying solely on their partners, women would be willing to partner with a financial professional. In-person communication doesn’t preclude other options, such as calculators, model portfolios, emails and website content. Each of these tools can be used as a conversation-starter, or as a follow-up to in-person sessions. The key to engagement is putting the personal experience at the center of the participant experience, and using other communications channels and tools to help support that model.

Tips for a successful plan

Organizations stand to gain by helping their employees — both men and women — better understand the retirement savings process and the tools available to them through their employer-sponsored plans. Here are several steps plan sponsors should consider:

  • Engage with a multifaceted approach for a dynamic segment. Although women can be grouped together by gender, a single approach does not work for everyone. Instead, help women participants understand that regardless of their situation, there is an individual pathway to retirement through appropriate investment options, tools and educational offerings.
  • Offer in-person guidance, particularly one-on-one if possible. Communication and education programs tend to run more smoothly and effectively with professional, personable representatives guiding the way.
  • Deliver outcomes-focused communication. For example, help participants define where they want to go and how to get there (future retirement goals and needs), rather than overwhelming them with investment choices.
  • Consider automatic features. The most difficult decisions — enrolling in the plan, deciding how much to save, and selecting investments — can be real barriers, particularly to hesitant investors. Auto features can help participants overcome those obstacles and get people started in the right direction.
  • Provide straightforward choices. Participants, particularly women, are influenced by several factors and try to synthesize a lot of information when making retirement decisions — all while balancing other daily priorities. They will appreciate anything that simplifies the decision-making process when it comes to investment options. Help participants organize the available investments into meaningful categories, to narrow down the universe of options to the funds or strategies that best suit them.

The journey to a successful retirement is long and often times challenging. Although the savings behaviors of women may be unique to those of their male colleagues, organizations stand to gain by understanding the needs of all employees and offering retirement planning services that are aligned to those needs. Supporting communication and education programs that acknowledge the emotional drivers of savings, as well as intellectual influences, are most likely to boost retirement readiness for all participants.

See also:

[1] Lincoln Retirement Power: Participant Study 2012