generations continue their concerns in saving for retirement, there’s one
other demographic still strapped for knowledge: Women. They are more
anxious about their savings than men, and face unique challenges to
building retirement income.
TIAA report finds women
work for less years and gain fewer salary increases compared to men. Saving
early in their careers can seem tough as well. The TIAA study found that in
order for two recent college graduates to secure an equal amount in retirement
savings, the male would need to save 10% of his salary, while the woman would
have to put away 18% of her pay. Career breaks, whether it be caregiving
or raising children; greater life expectancy and higher
lifetime health insurance costs all add to the earnings gap and savings
shortfall, a potential number of up
to 1.3 million dollars.
combat these challenges, T. Rowe Price created a short,
seven-episode video series on real-life experiences shared by 23 women, as
well as advice on how to take back control of finances.
for different generations, studies show Millennials need a
savings rate of 22% in order to accumulate enough for retirement, with a
start-date of now, due to lower expected market returns. A NerdWallet analysis
reported that if a 25 year old Millennial were to wait until age 35 to save, he
or she must put aside an almost impossible 34% ($16,400) annually in order to
retire at age 67 with an 80% replacement income, assuming 5% annual returns.
loans delaying most from saving, as well as 70%
of Millennials preferring to travel than save, it’s possible the generation
may see a bleak future in retirement.
there are evolving technologies and advances that exist to further assist
workers in saving. Willis Towers Watson found that 66%
of Millennials and Baby Boomers believe mobile apps and tools are either
important or very important in managing and tracking the value of retirement
savings. Furthermore, 59% of Millennials and 54% of Boomers place higher values
on tools to help them track retirement goals.
Boomers, education is particularly critical, especially since the age group is
closing in on retirement each day. A survey from the Indexed Annuity Leadership
Council (IALC) found that among Boomers, one in four have saved
less than $5,000 for retirement. Pension income won’t cut it either, as the
estimated a total of 56 million Boomers will not obtain any income from
pensions, and any future retirees will need more than $400,000 to replace
and Boomers aren’t the only generations struggling to save, however. Among
defined contribution (DC) plan participants in Generation X, less
than four-in-ten believe they will have enough saved for retirement. Competing financial priorities are making Generation X far less confident than other
generations that they will be able to make ends meet in retirement.
As all demographics
continue their fight in retirement investing and saving, plan advisers and
sponsors can respond with targeted communications and the right tools.