The average retirement savings of women in the United States is one-third lower than the savings of their male counterparts, according to a new study by Prudential Retirement.
The paper notes a combination of behavioural patterns and external pressures putting women at a disadvantage in terms of planning for and saving toward retirement, including the financial impact of maternity leave and time-consuming caring responsibilities, a higher share of student loan and mortgage debt, a more conservative or passive approach to investing, and a greater likelihood of being single later in life, after divorce or the death of a partner.
Read: Bridging the pension gender gap
“Seeing the differences in account balances was eye-opening,” said Janice Co, head of strategy and marketing for Prudential Retirement, in a news release. “Compound this with lower average social security benefits and longer life expectancies, and women are caught in a perfect storm when it comes to retirement.”
The paper suggests a number of ways employers can help bridge the gender gap in retirement savings, including optimizing retirement plan design to feature automatic enrollment and escalation, offering target-date funds as a default option and providing in-plan guaranteed lifetime income options.
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It also notes plan sponsors can expand education and improve employee engagement by offering financial wellness programs and updated support resources, while leveraging technology to help all participants better understand their retirement needs and set savings goals.
“For working women, the most important thing is to make sure we’re taking care of our future selves in retirement by paying ourselves first,” said Co. “We should increase retirement contributions by one per cent each year and find a financial planner who can help balance retirement savings goals with other financial priorities. Even small changes can make a big difference and help us retire with confidence.”
Read: Women 80% more likely to be in poverty after retiring than men: study