Women’s financial security has been hit hard during the Covid-19 pandemic. Yahoo Finance recently hosted a panel discussion about women’s financial security. Women’s financial security is at-risk do to the challenges with regards to investing, saving, and retirement. The esteemed panel featured participants from Funding Our Future, Edelman Financial Engines, the Global Financial Literacy Excellence Center, the Aspen Institute, and the American Council of Life Insurers. It’s fitting that this group would come together to talk about women’s financial security this month, as April is also Financial Literacy Month.
In the past year, nearly 3 million women have exited the workforce as the result of the pandemic. This can be due to job loss, or to stay home to care for children or serve as a caregiver to older generations. The need for women’s financial security adds a layer of complexity on top of the financial pitfalls many women already face. They must exit the workforce more often throughout their careers to give birth or be caregivers. Women typically earn less than men, around $0.81 on the dollar. Women also live around five years longer, on average, than men. That means women’s retirement savings needs to last longer. However, taking breaks from the workforce and earning less obviously impacts women’s financial security. This inhibits women’s ability to save adequately for retirement. So it’s no wonder that 68% of senior women live in poverty. That statistic has been exacerbated by the pandemic, according to Kelly O’Donnell. Ms. O’Donnell is Executive Vice President and Head of Workplace at Edelman Financial Engines.
This results in women being likely to be financially fragile. Women are unable to come up with $2,000 for an unforeseen emergency or expense, said Hallie Davis, senior research associate at the Global Financial Literacy Excellence Center at the George Washington University School of Business. She also noted that there is a gender gap in financial literacy and stock market participation. So it is important to improve financial confidence and knowledge among women, in order to help them to make better-informed investing and savings decisions. This, in turn, will help them to prepare for the future.
Approximately 40% of women have had a life event that has impacted them financially during the pandemic, Ms. O’Donnell observed. It will take as much as six years for these women to recover. She encouraged women to start saving, wherever they are. She also mentioned that benefits, such as a 401(k), are key to helping women achieve greater financial security. Moreover, employers are beginning to focus increasingly on women’s financial security, thus, implementing benefits such as emergency savings accounts and student loan support. These are vital to helping all employees improve their financial footing so they can achieve their goals.
Ms. O’Donnell and Ms. Harris offered this advice for employers. Meet women where they are and recognize their needs, especially for financial security and flexibility. Also, consider creating employee resource groups (ERGs) where women can share their common experiences and challenges. And find common ground and support so they can flourish – financially, personally, and professionally.