Women Less Prepared for Retirement

According to a study commissioned by the ING Retirement Research Institute called “Retirement Revealed,” women are less prepared for retirement than men—with nearly $41,000 less saved on average.

Fewer women (25%) than men (33%) have a formal investment plan to reach their retirement goals. In addition, 56% of women do not feel financially prepared for retirement, compared with 42% of men. 

Delia deLisser, director of women’s marketing for ING U.S. Retirement, told PLANADVISER that women face special challenges including spending fewer years in the workforce than men in order to raise kids, and making less money than men. To compound the retirement crisis, they generally live longer than men. 

“This for us is really a concern because women are really facing some greater needs,” deLisser said.

The challenges women face in retirement planning seem to ring true across generations. The survey found that in all generations, with the exception of the 50 to 64 age range, men tend to contribute higher percentages of pay to employer-sponsored retirement savings plans. Generation Y women (ages 25 to 34) are most likely to have barriers to saving (86%) compared with women 35 or older (74%).  Seventy percent of Gen Y women feel unprepared for retirement versus 56% of Gen Y men.

How to Help Women  

Financial professionals can help narrow this gender gap by educating women and considering their unique challenges. deLisser emphasized that women want their needs heard. Female participants want to discuss concerns, goals and personal situations with their families. “Really, really sit and listen to that,” deLisser said.

Women are extremely engaged with their families and tend to make retirement decisions that can provide security for their family, rather than just afford them nice things, deLisser said. “Women really are looking to know that when they put a plan together, it’s going to have those protections in it,” she added. “They’re not just in it for upside growth or buying a hot stock.”

Women should be encouraged to engage in the retirement planning process, even if they find the topic intimidating. They should be educated on basic savings, as well. If they have access to employer-sponsored retirement plans, they should be participating and taking advantage of a matching benefit if the plan offers it, deLisser said.

Women should also set a monthly budget and stick to it, while making sure retirement savings is built into this plan.

“We can see that the financial planning needs and retirement savings goals of women reflect the demands of their lives, and for many it is a challenge to identify what needs come first,” said Maliz Beams, CEO of ING U.S. Retirement. “Working with a financial professional can help women address and prioritize their distinct situations so they can be best prepared for retirement.”

 Additional results from the survey revealed:   

•  The majority (60%) of mothers do not feel prepared for retirement, and nearly half (46%) do not know how to achieve their retirement goals.  
•  More than half (53%) of mothers have less than $25,000 saved in their employer-sponsored retirement plan.  
•  More single women (69%) said they relied on their own research or family and friends for financial guidance than married women (63%), and single women were less likely to work with a financial professional (21%) than married, divorced or widowed women (31%).   
•  Only 6% of Gen Y women put most of their extra money to retirement savings, whereas nearly half (47%) put it toward entertainment or vacations. 
•  Only one-third (33%) of women ages 50 to 64 have a formal investment plan to reach their retirement goals.

This study was conducted by the ING Retirement Research Institute through examining 4,050 adults (2,106 men, 1,944 women) ages 25 to 69 with a household income of $40,000 or higher and full-time employment.