Plan Sponsors – Help Women Save More for Retirement — Here’s How. Tom Foster, a practice management leader for retirement plans at Mass Mutual, recently penned an article for Advisor Magazine titled “America’s Growing Financial Diversity.” While the article is targeted at financial advisors and how they approach planning with clients from different demographics, including Latinos, African Americans, men and women, and lesbian, gay, bisexual, transgender, queer or questioning (LGBTQ), it could easily apply to retirement plan participants.
A key factor for plan sponsors to consider is the differences in savings behaviors between men and women. Foster points out that women are three times more likely than men to say they can’t afford to save for retirement, according to a Mass Mutual study.
Here’s some additional data from Mass Mutual that points to the stark differences in the ways men and women view savings — and the vital importance of reaching the female participant demographic in your plan to make sure they are planning ahead for their financial needs in retirement:
“Only two in 10 women report having $10,000 or more in savings for financial emergencies compared to three in 10 men, the study reports. Seventy-three percent of women who are not saving for anything other than retirement say all of their income goes towards monthly expenses and bills; 62 percent of men say the same. Women are also less likely than men to use any extra money to pay off debt (38 percent to 47 percent, respectively).”
When they do save, women tend to pay themselves last, setting aside whatever they have left over after expenses, whereas men typically put aside a set amount each month, Foster notes.
What can you do to help female employees feel more comfortable saving for retirement? Foster suggests reminding them that it pays to save pre-tax dollars in their workplace retirement plan. Since it reduces their taxable income, setting money aside in the plan may actually make it “more affordable” for women to save. Moreover, if you offer employer matching contributions in your plan, you can remind them to save at least enough to qualify for the match, which of course, can help increase their overall savings for retirement.
Given that their life expectancy is longer than their male counterparts’, women are especially vulnerable to the possibility of outliving their retirement savings — particularly if they are under-saved to begin with. By encouraging them to set aside more money for the future today, you can help them improve their outcomes and financial stability in their post-working years.
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