Data & Research September 15, 2022

Unmarried and Married Women Have Different Levels of Retirement Confidence

EBRI research demonstrates that unmarried women are significantly less confident in their ability to live securely in retirement than their married counterparts.

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New research from the Employee Benefit Research Institute suggests that women would benefit from retirement advice that considers their marital status.

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The study from EBRI shows that unmarried women are less confident in their ability to retire securely than their married counterparts.

EBRI separated 758 female workers and 545 female retirees from a larger online sample of 2,677 Americans age 25 and up. The study weighted the sample by age, sex, household income and race using census data to make it more representative of the national population.

Among never-married women workers, 51% said they were not confident in their ability to live comfortably through retirement, versus 22% of married women and 55% of divorced women.

This insecurity comes from a variety of sources. For one, 27% of married women reported having $25,000 or less in total assets, whereas 56% of never-married and 58% of divorced women did.

Accordingly, unmarried women were more likely to say they were prioritizing shorter-term expenses over their retirement: 41% of never-married and divorced women said that saving for retirement is not a priority relative to current needs, compared with 27% of married women.

Unmarried women were also more likely to say they were prioritizing buying a home or starting a business over saving for retirement. This could suggest that unmarried women are looking for sources of independent income and wealth as a priority, or even as a substitute for retirement savings, though the study does not expand on this.

Another explanation for unmarried women’s relative retirement insecurity is that they are less likely to know who to go to for retirement advice, as 45% of never-married women said they do not know where to go for advice, versus 36% of divorced women and 27% of married women.

The study acknowledges that the responses of married women could reflect “collective knowledge,” meaning that though married respondents wouldn’t know where to go for advice themselves, they believe that their partner would.

Though the study weighted for a number of demographic factors, it did not include weighting for educational attainment. This is despite findings in the field of survey research that those without a high school degree are chronically undersampled, and those with a college degree are consistently oversampled. This is in part due to the fact that higher-educated people are more likely to have a cell phone, landline and access to the internet, and are therefore more likely to be sampled by survey researchers.

Research from Pew shows that better-educated adults are also more likely to be married, and as such the gap in retirement confidence between unmarried and married women may be due in part to married women tending to be more educated. In other words, the gap may be overstated since it does not weight for education, but it cannot be said for sure without further research.

The EBRI study also notes that unmarried women were more likely to say that debt was an obstacle to saving for retirement than married women, though it does not specify the sources of the debt. Among never-married women, 40% disagreed that debt was negatively affecting their ability to save for retirement, compared with 56% of married women.

Past research from Prudential’s Financial Pulse Survey shows that women tend to have less confidence in their retirement than men, and are less likely to have employer-sponsored retirement accounts. EBRI’s research shows that this insight can be further refined based on marital status, and can further inform the retirement investment advice provided to women workers and retirees.

Client Service September 15, 2022

PANC 2022: Health, Wealth and Retirement

A discussion about how to incorporate health into retirement planning and whether the HSA market expands business opportunities for advisers. 

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“I think we can all agree that health care is the biggest cost in retirement, so why do we silo [health care] from retirement planning conversations?” asked Brea Dantin, adviser and chief operating officer of ProCourse Fiduciary Advisors, LLC, and the moderator of a panel at the 2022 PLANADVISER National Conference in Scottsdale, Arizona.

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She said the question for advisers is, “We are already retirement experts, do we need to be health care experts too?” Employees aren’t thinking about health care in retirement, she said; they are thinking of their current cash flow needs. So how do advisers start the conversation about saving for retirement health care expenses?

Chris Ceder, vice president, head of Americas Retirement and Financial Wellness Programs at Goldman Sachs Asset Management, noted that health care benefit offerings have changed—namely, there are more high-deductible health plans. Current health care costs affect employees’ ability to save, and in retirement, those expenses will grow as employees get older. “Health care is connected to employee financial wellness, which is important to employers,” he said. “We need to have the health care conversation with employees.”

Kevin Takinen, adviser, 401(k) and Financial Wellbeing at Sequoia Consulting Group, said that given employees’ decumulation needs and the fact that retiree health care costs are projected to be above $300,000, saving in a health savings account is just as important as saving in a defined contribution plan. “Many employees don’t include savings for health care in their retirement planning. They are thinking of current health care costs,” he said. He agreed with Ceder that the savings for health care conversation can be tied in with financial wellness. “We need to help them see where they want to be tomorrow,” he added.

One thing advisers need to inform participants about, according to Dantin, is Medicare. “Many employees think Medicare covers health care in retirement—that it’s free,” she said.

However, Takinen said, advisers don’t need to be health care experts. “It’s important to cultivate partnerships,” he said. “Understanding that [plan sponsor] clients need to balance their benefits spend, advisers should ask to talk to their clients’ health care brokers. Advisers should talk to plan sponsors about all their benefits offerings.”

Dantin added that it’s good that third-party administrators are getting into the HSA servicing business. “Employees need help pulling everything together, and it’s important for advisers to build partnerships,” she said.

Ceder said it is important to talk to plan sponsor clients and their providers about their HSA plan design. “Do you want the HSA to only be a deductible offset? If so, that might not give employees the opportunity to save,” he explained. “Advisers can work with clients’ benefits brokers on plan design.”

Partnering with HSA providers and educating plan sponsors and participants can start relationships that are good for advisers’ prospective business, said Takinen. Advisers have an opportunity to show employees how to allocate their money. “For example, save in the DC plan to the match, then put savings in an HSA, and if there’s anything left, make Roth retirement plan deferrals,” he said. This can also help plan sponsors maximize use of their benefit.

Dantin pointed out that HSAs can also help plan sponsors that might have trouble with passing DC plan nondiscrimination testing. Highly compensated employees can put extra savings into the HSA, and they’re still saving for retirement.

HSA dollars can also be invested. Takinen said advisers can help make HSA investing uncomplicated. “It’s an additional opportunity to educate, partner and help,” he said. “Start with goodwill-building; it could lead to a revenue stream.”

Asked how advisers should advise those employees that don’t have access to an HSA, Ceder said such employees just need to boost their regular savings. They should think about their savings in buckets, Takinen added—savings for living expenses, savings for health care and savings for non-essentials, for example.

Dantin noted that there are efforts underway to decouple HSAs from high-deductible health plans, which will make these vehicles available to many more people.

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