The Retirement Savings Glass Is Only Half Full for Women
According to recent data from the National Council on Aging and the Women's Institute for a Secure Retirement, nearly half of women ages 25 and older lack access to a tax-advantaged, employer-sponsored retirement plan.
Digging Deeper into the Data
The top reported financial concerns among women, alongside insufficient retirement savings, include housing costs, Social Security and Medicare cuts. However, the lack of access to retirement plan benefits doesn’t paint a complete picture of the problem because even among the women who are eligible for workplace retirement plans, the average account balance falls behind those of men by a startling 50%, according to Bank of America's Financial Life Benefits Impact Report. This disparity can create a chain of negative financial consequences for both female workers and organizations.
Impacts on Women and Employers
The impacts of the shortfall in women’s retirement savings on the overall gender wealth gap are far-reaching, exacerbating their longer-term financial insecurity. Due to their longer average lifespan, women often require larger nest eggs for retirement than men. Therefore, a lack of adequate savings can often translate to a lower quality of life in retirement for women and can also delay their exit from the workforce due to economic necessity, which can then pass on additional costs to employers.
A Multi-pronged Strategy
In order to help negate some of these long-term effects, employers can help women better prepare for a more secure retirement in several ways:
- Implement auto-enrollment and auto-escalation features to help increase contribution rates among all those who may be contributing insufficiently, including women.
- Encourage saving by offering matching contributions — or increase the match offered.
- Provide financial wellness programming to educate women about the retirement savings gap and steps they can take to close it, including catch-up contributions for all eligible workers.
- Furnish additional education around the areas of concern for women mentioned above.
- Offer family leave to allow for continuing retirement plan contributions during periods of family care (only 24% of private-sector U.S. employers offer this benefit, according to the Department of Labor).
- Institute flexible work arrangements and allow part-time worker inclusion to help women stay in the workforce and continue contributing.
A Win-Win Solution
Implementing measures to address the gender gap in retirement savings can lead to many tangible benefits for organizations, including an increase in productivity and staff retention rates, maintaining a competitive edge in talent acquisition, and more effective and cost-efficient succession planning. In these and many other ways, helping women win at retirement can also yield significant dividends for the businesses that employ them.
Sources
https://www.plansponsor.com/nearly-half-of-women-lack-workplace-retirement-plan-access-survey-shows/
https://newsroom.bankofamerica.com/content/newsroom/press-releases/2023/06/bofa-data-finds-men-s-average-401-k--account-balance-exceeds-wom.html
https://www.dol.gov/sites/dolgov/files/WB/paid-leave/PaidLeavefactsheet.pdf
Please contact your MCF Advisors Plan Consultant with any questions or to review your current plan and plan’s offerings.
IMPORTANT DISCLOSURE INFORMATION
MCF Advisors, LLC (“MCF”) is a SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. More information about the adviser can also be found by visiting: https://adviserinfo.sec.gov/firm/summary/130372. The above commentary is for informational purposes only. Information prepared from third-party sources is believed to be reliable though its accuracy is not guaranteed. This is not intended as an offer or solicitation with respect to the purchase or sale of any security. MCF may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by MCF), or any non-investment related content, made reference to directly or indirectly in this blog/newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog/newsletter serves as the receipt of, or as a substitute for, personalized investment advice from MCF. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. MCF is neither a law firm nor a certified public accounting firm and no portion of this content should be construed as legal or accounting advice. A copy of MCF’s current written disclosure statement and customer relationship summary (“Form CRS”) discussing our advisory services and fees continues to remain available upon request. The scope of the services to be provided depends upon the needs of the client and the terms of the engagement. If you are a MCF client, please remember to contact MCF, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services.