Women face challenging retirement realities, study reveals
Monday, May 7, 2012
Women are less prepared for retirement than men -- with nearly $41,000 less saved on average, according to a study commissioned by the ING Retirement Research Institute.
Among those who have savings in or outside of an employer-sponsored retirement plan, men have a striking $149,000 in total savings on average, compared to women, who averaged $108,000, according to "Retirement Revealed.” For women with children at home, the retirement savings figure dropped even further to $88,000.
ING's online survey of more than 4,000 Americans who work full time and earn at least $40,000 found that more women (42 percent) than men (34 percent) contributed just 1 percent to 5 percent of their salary into their employer's retirement plans. Fewer women (25 percent) than men (33 percent) have a formal investment plan to reach their retirement goals. In addition, well over half (56 percent) of women do not feel financially prepared for retirement, compared to only 42 percent of men.
"It is clear that many women -- regardless of their age or life stage -- must do more to save for their retirement,” said Maliz Beams, CEO of ING U.S. Retirement. "The combination of living longer and saving less can hamper a woman's ability to reach her goals.”
Mothers face additional hurdles when it comes to building their retirement security, the study found. While the income gap between menand women has narrowed in recent years, mothers tend to spend more time out ofthe workforce due to caregiver responsibilities. This reality reduces their earning and savings potential and lowers Social Security benefits.
The majority (60 percent) of mothers do not feel prepared for retirement and almost half (46 percent) don't know how to achieve their retirement goals, according to the survey results. Just over half (53 percent) of mothers have less than $25,000 saved in their employer-sponsored retirement plan. Less than two-thirds of mothers are receiving their employer's full company match compared to more than three-quarters of fathers.
Single women 18 years or older may be managing day-to-day household expenses on their own, while also trying to plan and save for retirement. ING's research found more single women than married women (69 percent vs. 63 percent) said they relied on their own research or family and friends for financial guidance. Single women also were less likely to work with a financial professional (21 percent) than married, divorced or widowed women (31 percent). Fewer than 30 percent have calculated how much they'll need to retire, compared to half of men. Approximately one quarter (26 percent) of single women spent some or a lot of time thinking about retirement, compared to a greater number (44 percent) of widowed or divorced women.
The study also found that women across the generations have differences in their approach to retirement and planning. Gen Y (age 25 to 34) women are most likely to have barriers to saving (86 percent) compared to women 35 or older (74 percent). More than half of Gen Y women (56 percent) have outstanding student loans. Only a small number (6 percent) of Gen Y women put most of their extra money to retirement savings, whereas close to half (47 percent put it towards entertainment or vacations.
More than half (54 percent) of women ages 50 to 64 have not calculated how much money they will need to continue their current lifestyle after retirement. Only one-third of these women have a formal investment plan to reach their retirement goals.