Data and Research March 1, 2016

A Mere 12% of Women Are Confident in Ability to Retire Comfortably

Transamerica takes a look at 16 factors setting women back when it comes to retirement.
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The Transamerica Center for Retirement Studies has released a report analyzing women’s retirement outlook in the U.S.—and why it is shaky for many. 

Called “Sixteen Facts About Women’s Retirement Outlook,” the new report is based on findings from the 16th Annual Transamerica Retirement Survey of American Workers. The firm says its latest report is being released in recognition of International Women’s Day on March 8, “which recognizes women’s social, political and economic advancement.”

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“Women in the 21st century are better educated and enjoy career opportunities that our grandmothers’ generation could only dream about,” says Catherine Collinson, president of the Transamerica Center for Retirement Studies. “However, even in 2016, a woman’s ability to achieve a secure retirement is filled with obstacles, such as lower pay and time out of the workforce for parenting or care-giving, which can negatively affect her own long-term financial prospects.”

Following are 16 facts about women in the workforce and their retirement outlook:

1.) Only 12% of women are “very confident” in their ability to fully retire with a comfortable lifestyle.

2.) Fifty-six percent of women plan to retire after age 65 or not at all.

3.) Fifty-one percent of women plan to work at least part time after they retire.

4.) Nearly two-thirds (64%) of Baby Boomer women do not have a backup plan if forced into retirement sooner than expected.

5.) Nearly half (46%) expect their primary source of retirement income will come from their 401(k) or other savings and investments, while 29% plan to rely mostly on Social Security.

NEXT: Social Security outlook

6.) The vast majority, 81%, of women are concerned that Social Security will not be there for them when they retire.

7.) Among women who plan to take time out of the workforce to be a caregiver, 67% think it will adversely impact their ability to save for retirement.

8.) Nearly one third, 28%, of women work part-time and are less likely to have workplace retirement benefits.

9.) Sixty-two percent of women are offered a 401(k) or similar employee-funded retirement plan.

10.) Seventy-six percent of women who are offered an employee-funded plan participate in it.

11.) Women who participate in their employer’s retirement plan save an average of 7% of their salary.

12.) Fifty-three percent of women are saving for retirement outside of work in an individual retirement account (IRA), mutual fund, bank account or other vehicle.

13.) Women estimate they will need an average of $1 million to feel financially secure in retirement.

14.) Among women who have estimated their retirement savings needs, 62% say they guessed.

15.) Only 36% of women use a professional financial adviser. Among this group, 75% rely on them for retirement investment recommendations.

16.) Fifty-two percent of women say that information that is easier to understand would motivate them to learn more about retirement.

Data and Research March 1, 2016

Employees Expect Lower Standard of Living in Retirement Than Parents

More than three quarters (76%) think they won't enjoy the same quality of life as their parents.
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Three in four U.S. employees (76%) expect their retirement years will not be as secure as their parents’, according to Willis Towers Watson 2015 Global Benefits Attitudes Survey. Seventy-one percent believe Social Security benefits will be reduced, and 70% think government-provided health benefits will be worse.

Employees also indicated that their financial worries are having a negative impact on their daily lives, job performance and productivity. Twenty-one percent said financial anxieties are adversely affecting their lives, 41% say they often worry about their financial state, and 36% are concerned about debt.

The survey of 5,083 employees also found that fewer than half (48%) are satisfied with their financial situation. While this is an improvement from the 46% who were satisfied with their finances in 2013 and the 23% in 2009, many worry that their retirement savings will not last. Nearly one-third (31%) fear that their money will run out 15 years into retirement, and 50% think it will disappear in 25 years.

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“While the financial situation is improving for many employees, long-term financial worries linger, leaving them feeling vulnerable,” says Steve Nyce, senior economist at Willis Towers Watson. “Many employees still wonder how long they will have to work and how much they will have to build up in savings until they are able to retire.”

NEXT: Stress at work

Nearly one-third (28%) said that financial stress is precluding them from doing their best at work. Those who are not worried about money took an average of 1.9 days off from work, but those who are struggling financially took an average of 3.5 days. Further, those who have financial concerns say they are highly distracted on the job an average of 12.4 days a year, compared with 8.6 days for those not worried about their finances.

“Financial security is a top-of-mind issue for employees,” says Shane Bartling, senior retirement consultant at Willis Towers Watson. “Financial worries can have a negative impact on an employee’s personal and work life, and inevitably affect productivity, employee engagement and satisfaction. Employers are in an excellent position to help employees achieve both retirement and financial security in the short and long term, as well as reinforce good personal habits by providing tools, resources and benefit and total rewards programs that best meet their employees’ needs.”

The survey also found that 61% of employees believe their company should encourage them to save for retirement. However, only 41% are open to having their employer encourage them to better manage their finances, and only 30% are comfortable with their employers sending targeted messages to employees with financial issues.

“Employers have a long-established track record around retirement messaging and, more recently, have been pushing healthy lifestyles through their health and well-being programs,”  Nyce says. “Employers that think they have permission to charge ahead in a similar fashion on personal finance issues could end up disappointed or, worse yet, upset employees, which would be counterproductive to their goals. Employers have to be mindful of their approach if they are including personal finance education.”

Nonetheless, another recent survey on financial stress in the workplace by GuideSpark found that 78% of employees would join a company that offered financial health benefits over one that didn’t. Thus, it might make sense for each company to survey their own employees about financial wellness expectations to determine what the right balance might be.

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