Dual Dilemma For Women: Less Savings, Longer Lifespans

BOSTON — The 2017 MFS Heritage Planning Survey results reflect a major financial planning dilemma for women, who need to save more than men because they live longer, but find it hard to do because they leave work to care for their families.

That cuts into women’s confidence. According to the survey just four in 10 women are confident in their ability to address financial concerns and just one-third of women surveyed are confident they’ll be able to save enough for retirement.

The survey, which includes insights from 2,000 US investors, including 998 female investors, was conducted in conjunction with the 20 th Anniversary of MFS’ Heritage Planning program for financial advisors.

Women with children are much more likely than men to see job disruptions and a loss in retirement savings.

According to recent Bureau of Labor statistics, 70.5 percent of women with children under the age of 18 participate in the workforce — compared to 92.8 percent of men with children under 18.

It’s even starker for women with young children, as just 64.7 percent of moms with kids under the age of six participate in the workforce. Jenine Garrelick, senior managing director of internal sales with MFS, says it’s important for women who leave the workforce to continue to save money for retirement.

“Due to the effects of compounding, saving money for retirement during the early years in your career is crucial,” says Garrelick. “For women who’ve put their careers on hold, there are investment vehicles, such as spousal IRAs, that can help them avoid putting their retirement security in jeopardy. However, our research shows that most women don’t know about the options available to them.”

That continuity of saving becomes even more critical given that women, on average live about five years longer than men 1 – which means they’ll need more money for retirement and healthcare expenses.

Part of the solution is education. Just one in five women say they are extremely knowledgeable about investing and half of those surveyed say they are overwhelmed by their investment choices. When it comes to specific investment options, only four in 10 women surveyed said they are extremely knowledgeable about college savings accounts, IRAs and employer-sponsored retirement plans. It’s not surprising then, that over 70 percent of women surveyed said they would like to be more knowledgeable about investing and 57 percent of those with financial advisors said they would turn to those advisors in the next few years for more support.

“There is a clear opportunity for advisors to help women fill the education gap,” says Susan Kay, director of business development with MFS. “But advisors must be able to speak to women’s specific concerns to help them build a sound financial future. Eight in 10 women working with financial advisors believe it’s extremely important to turn to their advisor for retirement planning, but they are also worried about a host of other issues that they might face in retirement.”

Two-thirds of women surveyed said they are concerned about rising healthcare costs and half of those surveyed are concerned about a reduction in Social Security benefits.

These concerns were most pronounced among boomers, who are either on the cusp of or just entering retirement.

The cost of healthcare and a possible reduction in Social Security benefits were significant concerns for 71 percent and 53 percent of boomers, respectively.

In fact, over half of women surveyed are concerned that they won’t be able to retire when they want to. This belief is especially pronounced among younger women. Sixty-three percent of Millennial women and 68 percent of Gen X women are concerned about saving enough for retirement.

“There is no longer a ‘traditional role’ for women. Whether it’s Boomers, Gen X or Millennials, many women are concerned that they’re going to outlive their retirement savings,” said Garrelick. “Financial advisors need to spend more time really getting to know their female clients and prospects, because each one of them is an individual with concerns very unique to her own situation.”