Ignoring retirement realities could put women on shaky ground

The consensus at the Women’s Institute for Secure Retirement (WISER) annual symposium, held in Washington, D.C. two weeks ago, was clear: Plain and simple; women, as a whole, are sadly unprepared for retirement, and are lagging far behind men in preparedness.

The distinguished speaker roster—which included Senator Ben Cardin (D-Md.), a congressional sponsor of National Save for Retirement Week; Mark Iwry, a senior advisor to the Treasury Department; and Maliz Beams, CEO of ING U.S. Retirement Solutions—laid out the cold hard facts. Their expert perspectives were buoyed by Aon Hewitt's analysis of more than 140 defined contribution plans representing 3.5 million eligible employees. The firm’s research shows:

• While women are participating in their employers' defined contribution plans at the same rates as men, they save less—an average of 6.9% of pay, compared to 7.6% for men.
• Nearly a third of women contribute below the company match threshold, compared to just a quarter of men.
• As a result, women have average plan balances that are significantly less than men. Overall, the average plan balance for women is $59,300, compared to $100,000 for men.

Why the discrepancy? There are many possible reasons. Namely, women have lower salaries, which often leads to lower retirement saving. According to WISER:

• Three out of four working women earn less than $40,000 per year.
• Half of all women work in traditionally female, relatively low paid jobs without pensions.
• Women retirees receive only half the average pension benefits that men receive.
• Women's earnings average 77 cents for every $1 earned by men—a lifetime loss of more than $300,000.

Additionally, stats show that women tend to be more risk averse and spend more time out of the workforce caring for children and other loved ones, creating loss of pay over the course of their careers.

In light of these facts, it’s time to take action. Employers should educate all employees, including women, and encourage them to:

• Start saving early. No matter their age, encourage all workers to enroll in your 401(k) plan now, not later.
• Never leave money on the table. Ensure employees understand the minimum amount they must contribute to the 401(k) plan to receive the full company match, if offered.
• Seek advice from a financial advisor. If employees aren’t sure how to allocate funds, encourage them to ask for expert advice.
• Avoid taking withdrawals and loans from retirement savings. Emphasize these are only to be taken as a last resort for true hardships.

Whatever you do, don’t ignore the issues and the critical impact to your female employee population. Retirement education is the ticket to a happy retirement future for your employees—male and female!