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Women are increasingly proactive when it comes to retirement planning and it’s likely advisors are see that elevated diligence as more female clients are initiating retirement-related conversations with their advisors.
That’s a positive trend for multiple reasons, not the least of which are the points that women, on average, live longer than men and that in just a few short years, women will control more assets than ever before. Additionally, various studies and surveys confirm women are seeking more financial education and want to work with advisors, even more so than men.
Still, there are hurdles to be cleared. Following the coronavirus pandemic, some women remain underemployed and some are working multiple jobs to contend with still persistent gender pay gaps. Those scenarios imply the focus of women in those groups might be more about simply making ends meet rather than planning for retirement.
As advisors know, procrastinating on the retirement front hardly ever works out well and those delays can become sources of stress for any client. Advisors can turn retirement negativity into positivity for female clients by helping them capitalize on all the retirement tools at their disposal, including employer-sponsored plans.
Don’t Ignore the 401(k)
Helping women bolster retirement security isn’t a stretch for advisors and it can start with something as simple as educating those clients about the benefits of tapping employer-sponsored retirement plans, including 401(k)s. Some women aren’t doing that, but they ought to be.
“More than a quarter of women (26 percent) working full-time, part-time or looking for employment didn’t contribute to their retirement savings between August 2022 and 2023, compared to 19 percent of working men, according to a Bankrate poll. The percentage of Black and Hispanic working women who didn’t put money away for retirement between August 2022 and 2023 was even higher (29 percent),” according to a Bankrate survey.
The research indicates that the aforementioned gender pay gap is part of the reason why women aren’t using 401(k)s as much as they should, but there are other reasons explaining the chasm and those are issues advisors can assist with. Those include the proclivity of many women to use cash instruments rather than more aggressive investments and lack of financial confidence. Advisors working with women in those categories should take swift action because there are tangible benefits for the client.
“New Fidelity research shows that 40 percent of women plan to contribute to an emergency fund and 38 percent plan to save more for retirement in the next six months. Thirty-six percent of women plan to increase their income, while 35 percent plan to pay down debt and adjust their spending habits in the next six months, according to Fidelity,” notes Bankrate.
Encouraging Signs for Women and Retirement Planning
Historically, women have saved less for retirement than men – the byproduct of pay gaps, the belief that their male spouses are “taking care” of retirement and the expectation of inheriting assets, among other factors.
However, there are variables in those scenarios and more women are realizing they need to take command of their retirement fates. In what amounts to good news for advisors and female clients alike, some are doing just that.
“There are more working women saving for retirement than ever before. In the last three years alone, the percentage of women in the workforce contributing to their retirement savings has slowly ticked up. In 2020, a Bankrate survey found that 70 percent of working women contributed to their retirement savings. By August 2023, that figure was up to 74 percent,” concludes Bankrate.