Data & Research March 21, 2011

Genders Similar When It Comes to Retirement Savings

The Employee Benefit Research Institute (EBRI) found men and women are equally likely to say they (and/or their spouse) have saved for retirement or are currently saving for retirement.
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EBRI’s Retirement Confidence Survey found women are statistically as likely as men to report they are offered (43% vs. 49%) and contribute to (34% vs. 39%) a workplace retirement savings plan. Men and women are statistically equally likely to say they (and/or their spouse) have an individual retirement account (IRA, including a rollover IRA) (47% vs. 44%).  

In addition, according to an EBRI Fast Facts report, the survey found men and women have similar expectations for the age at which they plan to retire; both men and women have a median expected retirement age of 65. However, men are more apt to say they will never retire.  

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Women (23%) and men (22%) are equally likely to report that they have changed their expected retirement age in the past 12 months. Among those who have altered their plans, the vast majority of both men (88%) and women (90%) say they plan to retire later, at an older age than before.  

Men are statistically just as likely as women to expect to work for pay in retirement (77% of men versus 72% of women).

…but, There Are Differences  

The Retirement Confidence Survey did find some differences between men and women in their retirement confidence and ideas about needs in retirement. 

According to the Fast Facts, more so than women, men tend to feel very confident that they will have saved enough money to live comfortably throughout their retirement and are doing a good job of preparing financially for retirement. Men are also more apt to be very confident about having enough money to take care of basic expenses and medical expenses.  

Women (40%) are statistically just as likely as men (45%) to indicate they have tried to calculate how much they will need to have saved by the time they retire so that they can live comfortably in retirement. However, despite the fact that women tend to face higher health care expenses in retirement due to their greater longevity, women (35%) are more likely than men (26%) to think they will need to accumulate less than $250,000 for retirement.  

Women are also more likely to say they do not know how much they will need to save (12% vs. 5%). Men more often say they need to accumulate $1 million or more for retirement.  

The Retirement Confidence Survey found, in general, workers are much less confident about retirement than last year (see "Workers More Worried About Retirement").
Data & Research March 21, 2011

DC Accounts Grew Despite Recession

Vanguard research shows that defined contribution (DC) savings for most participants continued to grow over three- and five-year periods, even during the turbulent years of 2008–2009.
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Median and average account balances for Vanguard DC participants rose to $26,926 and $79,077, respectively, at the end of 2010—their highest level since Vanguard began tracking this data in 1999. Over the 2005–2010 period, median participant account balances rose 13%. Among continuous participants, the median rise in account balances was 77%, and nine out of 10 participants had higher account balances in 2010 than in 2005.  

The research report noted that even in 2007–2010, the three years beginning near the peak of global stock prices, median balances rose 7%. Among continuous participants, the median rise in account balances was 31%, and eight out of 10 participants had higher account balances in 2010 than in 2007.  

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An estimated 2% of participants stopped contributing to their employer’s plan in 2010—down from 3.1% observed at the peak of the recession in 2008 and below the prerecession level in 2006, when 2.5% of participants stopped contributing to their employer’s plan.  Despite a dramatic surge in stock market volatility during the worst months of the financial crisis, the percentage of participants trading rose only slightly from 14% of participants in 2006 to 16% in 2008, according to the report. In 2010, the percentage trading fell to 12% of participants.   

Over the 2007–2010 period, only 3% of participants may have executed “panicked” trades (selling out of equities entirely). During the 2005–2010 period, the net movement of money among traders had been generally toward fixed income investments. Nonetheless, even at the height of the recent market volatility, there were significant gross flows toward equities among some participants.  

The analysis of Vanguard DC participants found new loan issuance rose in 2009 and 2010, returning to prerecession levels of 2005. Hardship withdrawals grew 49% over the 2005–2010 period; however, at 2.2% of participants in 2010, the percentage of participants taking hardship withdrawals is still low on an absolute basis. The number of in-service non-hardship withdrawals also grew over this period by 56%.   

The number of participants terminating employment who chose cash distributions rose by two percentage points during 2008 and 2009, but then fell back by one point in 2010.  About 90% of participants with losses in the 2005 – 2010 period took a distribution from their account—such as a loan or a withdrawal.   

The complete Vanguard report is here.

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