How Advisors Can Help Women Rescue Their Retirement

Despite notable progress in employment, education, and career opportunities, women are still at greater risk than men of not achieving secure retirement, according to surveys.

With a lingering gender pay gap, and timeouts from the workforce for parenting and caregiving, women are left with lower lifetime earnings, less access to employer-sponsored retirement plans, and lower Social Security benefits. The pandemic added serious headwinds to the already stretched finances for women, often beyond their limits.

Catherine Collinson, CEO and president of the nonprofit Transamerica Institute and its center for retirement studies, revealed survey results this month that showed 51% of women respondents said their financial situation has been negatively impacted by the pandemic. The survey also showed 42% of women experienced direct repercussions such as reduction in work hours, pay cuts, layoffs and furloughs.

Collinson added a caveat to the survey, noting that it was conducted at the end of 2020 of employed women when large parts of the economy were still shuttered.

But that didn’t do much blunt the somewhat discouraging overall statistics showing women face formidable competing financial priorities. The survey revealed 62% of women said paying off debt was their No. 1 goal, 46% cited building emergency savings as their top priority, and almost one in three said they are just getting by to cover basic living expenses.

“Another finding was that six in 10 women had to make some sort of adjustment to their finances,” she said, in presenting her findings at a webinar sponsored by InsuranceNewsNet and Ohio National Financial Services. “So even for those who have weathered the employment storm, there were negative effects on their ability to save over the long term.”

Statistically, of course, women live longer than men, which presents an even greater need for women to save and prepare for longer retirements. Fewer than one in five respondents said they felt confident of retiring with a comfortable lifestyle. The Transamerica survey showed that the median amount women had set aside for emergencies was just $4,000.

“It’s good news that they are saving,” Collinson said. “But we know that doesn’t go very far in a time of unemployment or a major roof repair or the types of curveballs that life can throw at you along the way.”

There were some other good signs in the survey, she noted. Nearly 77% said they are saving for retirement through their employers’ 401(k) or similar plans.

“We asked how much they had saved in all their household retirement accounts and found an estimated median amount of $57,000, which is less than half of the $118,000 saved by men,” she said.

Collinson outlined five suggestions for addressing the shortfalls in retirement for women and the overall gender disparities. They all led to financial advisors.

• Women need assistance with financial planning. Fewer than one in four respondents in the Transamerica survey said they have a written retirement strategy or formal financial plan.
• A lack of goal-setting. Women need to set both short- and long-term financial goals.
• Gaps in insurance coverage. “Are there insurance protections available to women that could help cushion the blow if disaster strikes,” she said.
• Assistance with decision-making. “Financial advisors can be really helpful in assisting women in their life decisions,” she said. “It might not change the outcome of the decisions, but it can be helpful to approach decisions more mindfully with the help of a financial consultant.”

In spite of the gloomy statistics and “scary headlines,” Collinson called herself an optimist who believes major progress in closing the retirement gaps for women could be accomplished.

“We have the ability to write a new ending to this story,” she said. “We have the ability to envision a more financially secure future. And I think that’s where we need to be focusing all of our energy. We can’t undo the past but we can learn from it, and honor it. And we can apply the lessons of experience and look at the future, how we plan for it and how we prepare for it.”

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].