Caregiving Hinders Women’s Retirement Preparedness

A study, “Juggling Current Priorities and Long-Term Security: Every Woman Needs Her Own Retirement Strategy,” by the Transamerica Center for Retirement Studies, found women most frequently cite their single greatest retirement fear (26%) as not being able to meet the financial needs of their family. More than one in four women (28%) expect to take time or have already taken time out of the workforce to act as caregiver for a child or aging parent. Of these caregivers, 73% believe that this time out will impact their ability to save for retirement.   

Further, many reported that their retirement may involve financial caregiving; one in three women (31%) expects that when they are retired, they will need to provide financial support for a family member other than their spouse.   

The study found that only one in five women (20%) said “saving for retirement” is their greatest financial priority compared to the majority of women (55%) who are focused on current priorities such as paying off consumer debt (e.g., credit card) or just getting by to cover basic living expenses.   

Often due to family responsibilities, women are far more likely to work part-time (45%) than men (24%). For women, working part-time translates into lower income and reduced access to benefits, including retirement benefits. Slightly more than half of women (58%) who work part-time reported having access to a 401(k) or similar plan, while the vast majority (83%) of women who work full-time have access to such a plan.

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When women do have access to workplace retirement benefits such as 401(k)s, nearly three in four (74%) participate. Women’s annual contribution rate, as a percentage of salary, is 6% (median), an amount that is likely insufficient for meeting long-term retirement needs. Twenty-two percent of women said they are “not sure” how their savings are invested. Three out of four women agree they do not know as much as they should about retirement investing.   

“Despite unique challenges that women face, there are important opportunities within reach that can help them improve their retirement outlook, such as getting savvy about saving and investing,” said Catherine Collinson, president of the Transamerica Center for Retirement Studies.   

Among Baby Boomers, a low percentage of women (20%) have a backup plan if retirement happens sooner than expected. “Life’s unforeseen circumstances such as a job loss, health issues, or family obligations can derail the best of intentions,” said Collinson. “Especially with so many women planning to delay retirement or continue working part-time in retirement, a backup plan is an essential part of a retirement strategy.”   

The study outlines key steps that can be taken to help women capture a more secure retirement – steps that call for joint outreach efforts from the retirement industry (including retirement plan providers and advisers), employers, the media, policymakers, and other organizations that are dedicated to helping women achieve a financially secure retirement. This full list of key outreach elements and a series of recommendations are available here.