Study finds gender gap in financial, retirement security

Correction: A previous version of this article incorrectly referred to Corebridge Financial as AIG Life and Retirement. AIG spun off its Life and Retirement division last year and it became Corebridge.

While 41% of men say their financial situation has improved over the previous year, the same holds true for only 26% of women, according to Corebridge Financial's survey.

The survey also noted that this gender gap extends across several categories:

• Retirement readiness – Only 18% of women report an improvement, compared to 41% of men.
• Household employment income – 24% of women report improvement, 39% of men.
• Level of assets/savings – 28% of women report improvement, 49% of men.
• Ability to save – 33% of women report improvement, 48% of men.

“Women have made strides to narrow the gender gap in business, education and politics, but financial challenges persist."Terri Fiedler, president, retirement services at Corebridge Financial

“Women have made strides to narrow the gender gap in business, education and politics, but financial challenges persist,” said Terri Fiedler, president, retirement services at Corebridge Financial. “Our industry must work together to make it possible for more women to achieve financial and retirement security.”

Many have no financial plan

Another study by Bank of America paints a similar picture. It shows that while saving for retirement topped the list of short-term (49%) and long-term (54%) goals for many women, one in five women approaching retirement does not have a financial plan. In addition, 57% have not figured out how much to save for a comfortable retirement, and 40% are not confident about staying comfortable in retirement.

Faced with this bleak outlook, many women continue to look for reliable sources of advice to help them on their financial journey. But while 35% of them say that “a go-to trustworthy source for advice” would help make managing their finances easier and 44% see a financial advisor as a key financial resource, 55% have never worked with one.

In addition, though reliance on financial advisors increased only slightly with age (41% of women ages 22-39 vs. 47% of women ages 65+), it increased significantly by income level (35% of women with less than $50k in income vs. 61% of women with more than $250k in income).

Enhancing retirement security

To better prepare for retirement, there are a few steps that every woman needs to follow, and these start with a number, said MDRT member Regina Bedoya, president of RB Financial Advisors. This number is: How much monthly income, in today’s dollars, will you need when you retire? This number must include your basic expenses as well as your discretionary ones: travel, gifts, etc., Bedoya said. “After all, once we retire, every day is Saturday, “she added.

In the past, many financial advisors referred to a different number when assessing retirement preparedness: total retirement assets. But, Bedoya said, experience has shown us that a much better indicator of success is to know how much monthly income will be available, and how much of it is guaranteed to last your lifetime. “After all, we are used to paying most of our bills on a monthly basis, and calculating what we need to get to maintain a certain lifestyle is easier than figuring out what our total retirements must be,” she explained.

Once we know how much we will need, we must add the effects of inflation, she added. What we need the first month we retire will be quite different from what we will need 10 or 20 years later. “Ensuring that our income stream keeps up with the ever-increasing cost of living is crucially important. We can do that with income that is scheduled to increase every year, or we have different sources of income that are activated over time,” she said.

Finally, we must consider the cost of long-term care. About two thirds of Americans are expected to need care at some point in their lives, and this care can be quite expensive. “If you are able to obtain a long-term care insurance policy, you can significantly improve your chances of success,” she said.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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