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When it comes to being financially prepared for the future, women lag behind men. A new GOBankingRates survey found that nearly a third of adult women (29%) have not yet started their retirement plans. Meanwhile, just 17% of men say they have no retirement savings. In todays In the Financially Savvy Female column, we chat with Shelly-Ann Eweka, CFP, ChFC, Senior Director of Advice Strategy at TIAA, why women are more likely to have no retirement provisions and what they can do to catch up.
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The financial services industry doesn’t offer enough for women
One factor behind women’s lack of retirement planning is the fact that financial services companies are not doing enough to educate and serve this audience.
“Women are savers in general and the financial services industry needs to provide additional guidance and support to women who are saving to make sure they invest, to make sure they understand the options they have,” Eweka said. “There has to be an individual, tailored approach when it comes to women because one size doesn’t really fit all.”
Women, in particular, lack information about the importance of investing when it comes to saving for retirement, Eweka said. This aligns with the results of the GOBankingRates survey, which found that more than half of women (51%) feel they need more education about investing.
“As we think about empowering women to learn and implement how to invest their money wisely for their retirement, we need to help them understand their options, whether it’s through their employer or their environment [retirement savings accounts] get up alone,” said Eweka.
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Women have less disposable income than men
Aside from the issue of financial literacy, there’s also an actual financial issue—women just don’t have as much money as men to set aside for retirement.
“It makes sense that women have less retirement savings than men because women have traditionally been paid less than men,” Eweka said. “It’s 82 cents on the dollar for everything Women – Black women make 63 cents per dollar and Latina women make 53 cents. Those stats are staggering.”
Not only are women paid less, they are also more likely to lose income due to caring responsibilities.
“Since the [start of the] Pandemic in 2020 nearly 2 million women left the workforce,” said Eweka. “Much of this because they had children or elderly relatives to look after. Many of their lost earnings and savings are never recovered when they go through such situations.”
Many women are just struggling to make ends meet. A separate survey conducted by TIAA found that 29% of women struggle to pay their monthly bills, compared to 19% of men.
“You don’t have a retirement account if you’re struggling to pay your monthly bills,” Eweka said. “It’s a direct correlation. When you can’t keep up with monthly bills, saving for retirement is a luxury.”
How women can start planning for retirement
Eweka recommends meeting with a financial planner or advisor as the first step in planning retirement — and it may be more approachable than many women realize.
“If you have a retirement plan at work, you can contact the company that administers your retirement plan, and more often than not those companies offer complementary services,” Eweka said. “They hired financial advisors and financial planners to help you, the client, get started, help you understand your goals and guide you through the process so you know what you’re working towards. [They’ll also] Make sure you save enough for this and that goal [your funds are] properly invested.”
If you don’t have access to a financial advisor through your employee retirement plan, Eweka recommends looking into one of the free online retirement planning tools.
Once you’ve set up your accounts, the easiest way to save for retirement is to automate your contributions.
“Set up automatic contributions to your retirement account, whether it’s a 401(k), 403(b), or IRA,” Eweka said. “First set up those payments and then Organize your lifestyle around what is left and available.”
Even if you don’t have much to contribute right now, start small, Eweka said.
“Put aside what you can,” she said. “At least if you get a match, state it. If you can afford more than the same, aim for 10% to 15% of your income. If you can do more, if you can get the most out of it, do it. Because of compound interest, an investment of just a small amount can really help you earn a good income in retirement.”
GOBankingRates aims to empower women to take control of their finances. According to recent statistics, women have $72 billion in personal wealth – but fewer women than men consider themselves “good” or “excellent”. Women invest less and are more likely to be in debt, and women still receive less overall than men. Our Financially Savvy Women column will examine the causes of these injustices and provide solutions to change them. We believe financial equality starts with financial literacy, so we provide tools and tips for women, by women, to take control of their money and help them live richer lives.
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Methodology: GOBankingRates surveyed 1,012 Americans ages 18+ from across the country between March 8 and March 9, 2022 and asked sixteen distinct questions: (1) Do you consider yourself financially literate?; (2) Where did you acquire most of your financial literacy?; (3) What financial topic do you think you should have learned more about in high school? (Select all that apply); (4) What financial topic do you think you need more education on in 2022? (Select all that apply); (5) When you were growing up, did your parents talk to you about how to manage your money?; (6) Do you think high schools lack financial literacy?; (7) What has a lack of financial literacy cost you the most?; (8) At what age did you learn basic money skills (i.e. writing a check, reconciling your accounts, making budgets)?; (9) At what age did you start saving and planning for retirement; (10) How do you feel about how you used your American Rescue Plan 2021 stimulus check?; (11) Which financial topic did you feel the need to learn more about due to the COVID-19 pandemic? (Select all that apply); (12) What do you not understand about the child allowance? (Select all that apply); (13) What part of the home buying process do you find most confusing?; (14) What part of the car buying process do you find most confusing?; (15) Are you prepared for the student loan debt moratorium to end in May?; and (16) How are you changing your driving habits with rising gas prices? GOBankingRates used PureSpectrum’s survey platform to conduct the survey.