The pandemic apparently has chipped away at women’s confidence in retirement planning, according to a recent survey of employer-sponsored retirement plan participants and sponsors.
About one in five (18%) women feel they are on the wrong track for retirement and the same percentage expects to retire later than they originally planned due to the pandemic, findings from Nationwide Retirement Institute’s survey show.
In addition, the survey found that fewer women than men have been able to hit financial milestones, such as:
- contributing to a 401(k)/IRA (50% of women versus 58% of men);
- building an emergency fund (47% of women versus 59% of men); or
- increasing their retirement plan contributions (39% of women versus 51% of men).
Nationwide notes that retirement plan sponsors have taken notice of these challenges, with 70% saying they believe female participants are more likely to have been financially impacted by the pandemic than men. A major factor could be family responsibilities. Citing data by McKinsey, the firm notes that one in three women report they had thought about leaving their jobs or downshifting their careers in 2021, compared to one in four in 2020.
Consequently, many women are experiencing negative emotions when thinking about their current retirement plan status, including being worried (34%), frustrated (15%) or panicked (10%). According to Nationwide, these percentages are even higher for women who have delayed or cancelled their retirement plans, with 45% feeling worried, 54% frustrated and 16% panicked. In fact, more than half (51%) of women who have delayed or cancelled their retirement plans say the decision has negatively affected their mental health.
“Working through the pandemic hasn’t been easy for anyone. This is particularly true for women, who are balancing child or elder care challenges and career burnout,” said Amelia Dunlap, Vice President for Retirement Solutions Marketing at Nationwide. “This only adds to the stress that women are facing, feeling off course from their overall financial and retirement goals.”
Action Oriented
The good news is that women apparently are turning their energy into action. Since the pandemic began, 66% of plan sponsors have observed that women are more likely than men to make changes to their retirement plans. Of the women who are expecting to delay or cancel their retirement plans, 67% say they have shifted their overall approach to saving for retirement in response.
The survey also found that women are interested in exploring solutions that can help them reach their goals. Nearly half of female participants (48%) showed interest in an in-plan guaranteed lifetime income investment option, more than any other option provided to them. Additionally, more than a third (35%) indicated they are likely to roll their retirement savings into one if given the chance. The female participants who don’t contribute to a guaranteed lifetime income investment option say that their biggest barriers stem from a lack of knowledge, Nationwide notes.
“As employees are setting goals for the new year, plan sponsors have an opportunity to explore solutions that help their female participants—and all participants—retire on time with confidence, such as guaranteed lifetime income investment options,” says Dunlap. “However, in addition to considering their investment option line-up, our survey reveals that plan sponsors must also include educational offerings to ensure participants have the tools they need to address lack of knowledge and confidence.”
Edelman Data and Intelligence conducted the online survey on behalf of Nationwide from July 19 to Aug. 4, 2021, among 500 company plan sponsor decisionmakers; 300 financial advisors who advise at least one plan sponsor; and 1,000 plan participants aged 45 or older who work full-time and have access to a 401(k), 403(b) or 457(b) plan.
