Women Have a Steeper Climb to Retirement. Let’s Make it Easier.

Articles about financial differences between women and men often focus on the wage gap. But there’s another gap between the sexes that’s related to income and just as important to discuss. Let’s call it the retirement readiness gap.

According to recent statistics, the majority of individual workers face an uphill climb in preparing for retirement. But for women, the climb is steeper, and not only because they are on average paid less than men for similar work.

Women also face the following issues which make their path to retirement readiness a little longer and a lot harder:

• Women are more likely to work in part-time jobs that are not eligible for participation in a retirement plan. (Employee Benefits Security Administration, Women and Retirement Savings, Sept. 2015)
• Women who work full-time do so for fewer years than men, often leaving the workforce during their careers for family caregiving duties. (Society of Actuaries, Impact of Retirement on Women, 2013 Risks and Process of Retirement Survey Report)
• Women live longer—at age 65, the average life expectancy for women is two years longer than it is for men. (OECD, 2017)
• Women tend to invest more conservatively than men and fewer women than men are comfortable investing in the stock market. (BlackRock)

Many people—men and women alike—could use some help to make the climb to retirement readiness less arduous. But the unique issues women face should change the nature of what kind of retirement help women should receive.

How Women Can Help Themselves

Some solutions to the above issues seem obvious. For example, women can work in full-time positions longer or seek out part-time employment during retirement to make up the income and savings gap. But the dream of working past 65 is usually nothing more than that—a dream.

More than two-thirds of pre-retiree women say they want to continue working to age 65 and even beyond. But the reality is, two-thirds of retired women report leaving the workforce before age 65. (This disconnect between retirement expectations and reality goes for men, too.)

Working women should consider more feasible steps toward retirement readiness they can take on their own, including:

• Taking full advantage of workplace retirement plans, including matching contributions, annual deferral increases and higher contribution limits to help those over 50 “catch-up”
• Establishing and funding Roth or traditional IRAs to help increase their tax-deferred earnings potential
• Investing for growth to achieve long-term goals, including adding or maintaining allocations to stocks that are suitable for individual risk tolerance
• Delaying Social Security benefits if the income is not needed right away and to lock in higher benefits for later in life

How Employers Can Help Female Employees

Many employers may not think they have a vested interest in promoting retirement readiness among their workforce. But money is the leading source of stress among individuals, and in many cases, employees bring these stresses to their jobs. That can result in poor performance, loss of productivity and low employee morale.

Steps that employers and retirement plan sponsors can take to help women boost retirement readiness include:

• Schedule financial education sessions geared around the unique retirement planning needs of women
• Offer online tools and calculators that can help women see the power of compound, tax-deferred growth or better assess their risk tolerance
• Add 401(k) features to help increase retirement savings, including automatic enrollment and automatic contribution increases
• Provide access to professional help—many plan participants view one-on-one meetings with a financial advisor as most helpful in building confidence

Both men and women can benefit from some extra financial guidance provided at work. Because women have distinct financial and retirement concerns of their own, employers who can tailor retirement plan features and advice with these needs in mind can help promote better retirement readiness with their workforce overall.