In preparing for retirement, women have to contend with the salary gap, barriers to career continuity and more limited access to employer-sponsored pension plans, making them more stressed about their financial futures than men, according to a recent report by Invesco Canada Ltd.
The report set out three key ways employers can engage on this issue. First, it suggested women would benefit from a more aggressive savings regime. While they may be saving for retirement in large numbers, they’re saving a paltry amount of their overall pay. The report cited U.S. research that found women contribute about seven per cent of their earnings to some form of capital accumulation plan. However, the Defined Contribution Institutional Investment Association recommends all workers should be auto-enrolled to contribute six per cent, with escalation features to ultimately get them up to a 10 per cent cap.
Employers must also engage with their female employees on the need to invest for the long term, the report noted. When it comes to investment choices, women have a tendency to be more conservative than men, which carries dangers, as does taking on excessive risk. Starting conversations and boosting women’s confidence when it comes to discussing financial matters should be a key goal for employers, according to the report.
This conversation is all the more important given the fact that women typically live longer than men. The possibility of widowhood in retirement can affect women’s ability to maintain their standard of living, increasing the urgency of financial literacy and competency. For employers, one way to combat this issue is by increasing women’s access to simple, jargon-free tools to help them start and continue the investment process
Further, as employers increase their efforts to connect with women on financial issues, the wording matters, noted the report. Recent research by Invesco found women and men respond differently to language used in communicating financial topics. Notably, it found women don’t prefer that educational workshops tailored to them use words like “special” or “different,” as they perceive these carry a subtle implication of inferiority.
In order to connect most effectively, the report suggested employers can set up workshops that bear in mind that women tend to be relational learners and will be more effectively engaged by an interactive activity, as opposed to an expert simply launching into a presentation. Also, it recommended connecting life goals with financial goals for women, demonstrating practical strategies to help them get where they’re planning to go in retirement.
As well, the report noted women don’t respond well to messaging that explains how retirement planning is meant to avoid a negative outcome. Rather, messaging should focus on how using tools and strategies can help women reach their goals, keeping the conversation geared towards positivity.