Women’s Retirement Savings Especially Affected by the Pandemic

The pandemic has aggravated financial insecurity for millions of American workers, but data shows it’s affected women more severely than men.

A study by Nationwide found that among 297 women with investable assets of $100,000 or more, 72% believe the pandemic had a negative impact on their retirement savings. Additionally, women listed losses from the pandemic as their top financial concern last year. Other worries involved protecting assets, health care costs and longevity risk during retirement.

“With women, when you think about the impact of COVID-19, that’s entirely profound,” says Lori Hall, director of strategic accounts at Nationwide Financial. “In this pandemic, women are, unfortunately, challenged.”

Women—and especially women of color—are more likely to have been laid off or furloughed during the COVID-19 crisis, according to a report from McKinsey & Co., which means generating sustainable retirement income has become even more difficult. A 2020 Transamerica report found 52% of women said they have experienced one or more negative impacts to their employment as a result of the pandemic, including reduced work (24%), layoffs (16%), reduced salaries (13%), furloughs (13%) and/or early retirement (4%).

Others have been driven out of the workforce altogether due to a lack of flexibility in their work, housework and caregiving burdens, or burnout inflicted by the pandemic, according to the McKinsey research. Without working, many women miss out on key benefits including health care and access to financial wellness programs and retirement planning education.

These disparities add to the existing retirement planning gap between women and men. According to research by retirement plan provider LT Trust, women recorded an average retirement plan balance of $47,276 compared with $69,376 for men—a difference of more than $20,000.

The study, of which 34% of respondents were women and 66% were men, ignited a growing concern that women may be less likely to participate in or take advantage of investable assets to grow retirement income. The LT Trust study found women, on average, had allocated 53.5% of their investments into equities while men distributed 61.4% of their investments in equities.

Burke Johnson, executive vice president and chief operating officer (COO) at LT Trust, says behavioral attitudes can also impact how women are investing. “Women tend to be more risk-averse and conservative with their investments,” he says.

Hall says women are more likely to be skeptical about investing, possibly stemming from archaic expectations of women. “Women tend to be less optimistic about the market and so when an investor is overly bearish, there’s a chance they’re going to focus on risk and not have an appropriate allocation of investments needed to support a long-term vision,” Hall adds.

Because companies and workforces are different, Hall says she doesn’t think there’s a one-size-fits-all approach plan sponsors can take to address the financial challenges women face. Instead, she recommends they offer flexible work schedules and part- or full-time remote work options to employees, to keep workers engaged in the workforce and continuing to save in their retirement plans.

For workforces that cannot offer telework, including retail and labor-focused work environments, Hall recommends plan sponsors include financial wellness education and encourage their participants to work with a financial professional. Employer matches can also be an effective financial motivation for workers to continue saving, if they can.

Hall says it’s important to ensure plan sponsors are working with financial partners that are delivering effective materials. It’s not just about charts, graphs and numbers, she says. Sponsors should examine into how financial advisers are connecting with the workforce and what actionable items they’re implementing, depending on different needs and approaches. “The investment professional and recordkeeper should be providing resources to a plan sponsor to set their workforce up for success,” Hall says.