While women around the world share similar dreams of retiring in leisure and comfort, the financial reality for many is much closer to a nightmare. Indeed, only one in five women today believes they are on the right track to meet their income needs in retirement.
Those are among the findings of the recent research from the nonprofit Transamerica Center for Retirement Studies, “Women: Balancing Family, Career & Financial Security.” The research study polled 16,000 workers and retirees (including 7,956 women) in 15 countries to compare retirement attitudes and preparedness.
The most important message for financial planners to come out of the study is that women are looking for assistance and expertise in retirement matters. They are increasingly worried, and they want help identifying the best ways to catch-up with under-funded retirement savings.
There is some other good news in the study. For example, “Retirement confidence is rebounding, which is fantastic,” said study author Catherine Collinson. “Employment rates are picking up, and we see that in government data. And one thing we see in our research that bodes really well for people who are working and have access to retirement benefits is that 401(k) plan participation rates – which had seen a slight dip in contributions – are rebounding as well.”
Ill Prepared for a Long Life’s Demands
But before you get too excited, the bulk of the research findings are not encouraging, notes Collinson. Specifically, most women are still ill-prepared to face retirement compared with their male counterparts, and many fail to recognize how long a retirement they need to plan for.
“There are dark clouds looming over women with future retirement,” Collinson said. “Women today have levels of education and career opportunities that, frankly, their grandmothers could never have dreamed of. However, we still also have family responsibilities and are more likely to take time out of the workforce or work part time to be a parent or caregiver and this affects our pay. Over time it puts women at an extreme disadvantage compared to men, and on an entirely different trajectory.”
The center has published reports on women and retirement for 10 years now. But this year the study was taken global, collecting data from 15 countries, according to Collinson. There were some differences in the findings, but there was also a universal message – “women are lagging behind men in terms of their overall retirement savings and preparedness everywhere.”
“Most women are saving, so the issue isn’t getting women to save in the first place,” Collinson said. “The issue and the challenge is their ability to save enough. What is born out of the research is that circumstances—be it lower pay or lesser access to benefits—are holding them back in terms of their ability to save. Part of solving the problem is simply higher wages or higher earnings, greater access to benefits, and very specifically, the ability to save over time.”
The study also found that there is one very clear group of individuals that face especially harsh retirement reality: single women over 50.
“Single women over the age of 50 are at an extra-ordinary at risk situation with regard to their future retirement,” Collinson said. “The retirement confidence is low among these women anyway. But the analysis yields a more terrifying interpretation.”