The past 60 years have been recordsetting
in expanded economic
and social status for women. Not
only do women now comprise nearly half
of the U.S. workforce, but they are also
outpacing men in terms of educational
Yet, regardless of the substantial socioeconomic
advances women have made,
most women are not prepared for retirement.
In spite of similar individual and
household characteristics, women's
retirement savings lag behind those of
men. According to LIMRA's report, 2011
Gender Matters: Retirement Savings of
Working Men and Women, women's
average defined contribution (DC) plan
balances are only 60 percent of men's
Numerous conditions have contributed
to women's lack of retirement savings
compared to their male counterparts,
including persistent inequities in
the workplace and larger social structures.
These social structures have
placed a greater burden with regard
to childrearing and household tasks
on women, which can have a dramatic
impact on the ability of women to save
for retirement and obtain enough money
to live comfortably in retirement.
One key indication that a secure
retirement may be out of reach of many
women is their lack of savings for it.
Although net employee and employer
contributions likely explain much of the
gender difference in account balances,
women's tendency to select more conservative
investments could also result
in lower long-term returns on investments.
Another factor working against
women is lower average salaries compared
The Bureau of Labor Statistics' 2010
women's-to-men's earnings ratio was 81
percent. However, this ratio does not
control contributing factors such as:
• Type of positions worked.
• Fields of employment.
• Number of hours worked.
• Flexibility offered by jobs.
For instance, women are more likely
to seek employment roles that are more
flexible in order to care for children or
other family members-but such positions,
may pay less.
Women may also face saving shortfalls
because of their own failure to prioritize
retirement savings. When LIMRA
asked participants to indicate their top
reasons for saving (besides emergencies
and unemployment), the largest proportion
of both men and women selected
retirement as their most important reason
for saving. However, men of all ages
are more likely than women to identify
retirement as an important reason for
saving and differences between men and
women widen among older age groups.
Another circumstance that undermines
women's retirement security is
their lack of involvement in financial matters
and knowledge of financial products.
Men are more likely than women to play
an active role in financial and investment
matters, according to LIMRA's findings.
Over half of men are very involved in
managing their retirement savings, as
well as investigating whether to buy a
specific financial product. Whether it
is the result of superior financial literacy,
additional time spent researching
financial products and services or simply
more confidence in their knowledge, men
report having more knowledge on financial
products and services than women
do. When rating their own knowledge of
financial products and services, men are
also more likely to indicate that they are
"very knowledgeable" or "knowledgeable"
compared with women, 29 percent and 14
How can the industry help turn this
trend around? Encourage and educate.
Women should be encouraged to participate
in their employer's retirement
plan and to save more. Because women
are more likely to have work disruptions
for caregiving, they need to capitalize on savings opportunities, while they are
working, in order to compensate for a
longer average longevity. Plan features-
such as auto-enrollment to ensure maximum
participation and more aggressive
features for saving like auto-escalation of
deferral rates-should be promoted by
Companies should make efforts to
better educate women to improve their
financial literacy; it is essential to successful
retirement planning. In fact,
LIMRA's research reveals that improved
financial knowledge could have a domino
effect on preparedness since employees
with similar financial knowledge levels-
regardless of gender-are comparable
in terms of their behavior toward
retirement planning activities. Men and
women who rate themselves as knowledgeable
about investments or financial
products are more likely than those
who are less knowledgeable to be very
involved in monitoring and managing
their retirement savings. This finding
suggests that if women were to improve
their financial literacy, they may become
more active in retirement planning activities
and ultimately save more.
Nonetheless, saving for retirement is
a challenge for both genders-especially
since there are endless ways to spend
money. As today's retirement savings
vehicles emphasize personal responsibility,
working women need to save
enough to account for likely work disruptions.
Making both saving for retirement
and improving financial knowledge
a higher priority will go a long way
to getting women on track for a secure