Despite progress in terms of educational attainment and career opportunities, a new report suggests that women remain at greater risk of not achieving a financially secure retirement than men due to societal headwinds.
According to the report by the Transamerica Center for Retirement Studies (TCRS), the gender pay gap persists and women are more likely to take time out of the workforce for parenting and caregiving, translating to women having lower lifetime earnings, less ability to save, less access to employer-sponsored retirement benefits, and potentially lower Social Security benefits in retirement.
And the pandemic has only intensified this situation, TCRS observes in Emerging from the COVID-19 Pandemic: Women's Health, Money, and Retirement Preparations. Many women became stretched beyond their limits, juggling paid employment with home schooling and caregiving for aging family members.
Financial Challenges
As these unpaid family responsibilities increased during the pandemic, many women also experienced financial challenges and employment setbacks. According to TCRS’s survey findings:
- 37% experienced one or more negative impacts to their employment as a result of the pandemic, including reduced work hours (21%), reduced salaries (13%), furloughs (11%) and layoffs (11%);
- 44% are having trouble making ends meet, while 57% feel they do not have enough income to save for retirement;
- 58% cite paying off some form of debt as a financial priority, while 31% cite just getting by to cover basic living expenses; and
- 38% are either currently serving or have served as a caregiver in the past for a relative or friend during their working career (excluding parenting responsibilities).
In addition, women’s emergency savings are low, the report notes. Women have only $2,000 (median) in emergency savings, but that level does increase with age. Gen Z women have saved $500, Millennials have saved $1,400, Gen X has saved $3,000, and Baby Boomers have saved $7,000 (medians).
Retirement Outlook
Meanwhile, women workers are expecting diverse sources of retirement income, but they are also concerned about the future of Social Security.
Notably, almost three in four women are saving for retirement in an employer-sponsored 401(k) or similar plan and/or outside the workplace, even as they are contending with competing financial priorities. Diving deeper, 69% are offered a 401(k) or similar plan by their employers, including 75% of those working full-time, but only 47% who work part-time.
Among those offered a 401(k) or similar plan, women’s participation rate lags that of men (72% versus 82%). Women are also contributing at a lower rate of 10% of their annual salary, compared with men’s contribution rate at 14% (medians). Participation rates also lag between women and men who work full-time (75% versus 84%) and even those who work part-time (55% versus 63%).
TCRS further notes that, despite the significant number of women who are saving, many may not be saving enough, based on their reported total household retirement savings. Here, the findings show that women workers have saved only $43,000 (estimated median) in all household retirement accounts. Retirement savings does increase with age, as one might expect. Gen Z women have saved $26,000, Millennials have saved $29,000, Gen X has saved $51,000, and Baby Boomers have saved $101,000 (estimated medians).
Consequently, women are significantly less likely to agree that they are currently building a large enough retirement nest egg. Roughly one in five (21%) are “very” confident that they will be able to fully retire with a comfortable lifestyle, compared with 27% of men. Women (42%) are also less likely to say they are “somewhat” confident than men (50%). Moreover, one in four women (25%) are “not too” confident, and 13% are “not at all” confident, more so than men at 16% and 8%, respectively.
“Women workers have an opportunity to improve their retirement outlook by engaging in financial planning,” says Catherine Collinson, CEO and president of Transamerica Institute and TCRS. “A potential untapped resource for women is taking advantage of the tools and resources offered by their employer’s retirement plan provider that can assist them with setting goals and managing their investment.”
Moreover, Collinson suggests that fostering women's financial security requires a collaboration among stakeholders including policymakers, employers and individuals to modernize the retirement system and preserve social safety nets for current and future generations.
The survey was conducted within the U.S. by The Harris Poll on behalf of TCRS between Oct. 28–Dec. 10, 2021, among a nationally representative sample of 5,493 workers in a for-profit company employing one or more employees, including 2,686 women.
