Feeling financially secure has become more difficult due to inflation, and this is impacting women both today and well into their future.
Research from Nationwide Insurance Company revealed that 62% of women plan to retire later than they had hoped or don’t think they can retire because of inflation, compared to 47% of men. This is a significant jump from rates in 2021, when only 25% of women planned to adjust their retirement expectations.
“It’s been a crazy year coming out of COVID and the workplace has changed so much,” says Amelia Dunlap, Vice President of Retirement Solutions Marketing at Nationwide. “We’re seeing some pretty alarming numbers for retirement confidence, and to see that getting worse year after year due to market volatility, it was surprising.”
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Women generally lag behind men when it comes to their preparation for retirement – factors such as the gender pay gap, childcare breaks and shorter years in the labor force have an impact on how much women can save at retirement age. Research from the TIAA Institute found that men contributed $8,271 per year to their 401(k) in 2020, compared to $5,994 for women.
While it’s important to look after your future, women also bridge the financial gaps of others. Nationally, 15% of women who delay retirement said support from a family member or friend is one of the reasons they can’t save for themselves. Dunlap says women may have a more practical and immediate view of their finances than men, especially during times of financial hardship, which makes them more likely to put off pension contributions to make ends meet at home.
“I’m the one playing armchair psychologist, but I think women can have a more realistic view of what might be needed and internalize that even more than men,” she says. “We don’t see a lot of employers looking at gender differences, but it’s a very good practice for employers to look at their plan and offer different trainings or seminars that can be more tailored to the unique challenges of women. ”
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Dunlap says offer a guaranteed income option in a retirement plan could be particularly beneficial for female employees – such programs would automatically disperse 401(k) savings as a regular source of income during retirement. Employers should also educate employees about solutions available outside the workplace: for example, the recently passed Secure Act 2.0 offers emergency savings programs, student loan repayment benefits and other financial relief that could help all employees, regardless of gender, get out of financial hardship and refocus on retirement.
“We know employees face challenges that often get in the way of retirement savings,” says Dunlap. “Even before these provisions and all the solutions you have in place, you can still rely on education – create a budget, make emergency savings so that there is a balance between immediate financial needs and those 20 to 30 years old.”
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Inflation and market volatility come and go, says Dunlap. It is important to learn to ride the wave without upsetting long-term goals. Employers can offer a helping hand with education and resources so employees don’t find everything on their own.
“We expect the first half of the year to continue to be difficult in terms of market volatility, and when the markets are volatile people get scared, they withdraw their money, they stop contributing, they reduce their contributions, they make withdrawals,” says Dunlap. “Be sure to provide the right education and information so that employees can keep a long-term view in mind and not make ill-considered changes to retirement plans.”