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Break the Bias in the Gender Retirement Gap

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Break the Bias in the Gender Retirement Gap

Al Waller: International Women's Day marked annually on March 8th is a global event viewed as one of the most important days of the year to celebrate women's achievements, raise awareness about women's equality and promote accelerated gender parity.

Welcome back to ClearPath – Your Roadmap to Health & Wealth SM. I’m your host, Al Waller. With me is Catherine Collinson, CEO and president of nonprofit Transamerica Institute® and she's here to provide a greater awareness and understanding of this topic.
Catherine, good to have you back!

Catherine Collison: It’s great to be here, Al.

Al Waller: Now, Catherine, what else can you tell us about International Women’s Day?

Catherine Collinson: Well, here's a factoid for you – you may not know this. International Women's Day dates back more than 100 years. The very first International Women's Day occurred on March 19, 1911, and it was established in Australia, Denmark, Germany, and Switzerland.

More than 1,000,000 women and men attended rallies for women's right to work, to vote, to be trained to hold public office, and end discrimination. Here we are, more than a hundred years later. The theme of this year's International Women's Day is “Break the Bias,” which calls for people around the world to envision a world free of bias, both conscious and unconscious bias – and free of stereotypes and discrimination.

Al Waller: That's interesting because events like this really helped propel women into ultimately achieving the right to vote in the United States. I guess it came about eight years later with the passing of the Nineteenth amendment.

I know retirement security for women has been a key focus of the work that you and your team have done for the last fifteen years. So then, how does this retirement security fit into the larger discussion of risks that women face today?

Catherine Collinson: That's a great question, Al, and here we are in the year of 2022 – and women are still at greater risk of not achieving a financially secure retirement compared with men.

There's a number of contributing factors – I'll start with the gender pay gap. Even today, the gender pay gap persists. I'll share with you an insight from the World Economic Forum that illustrates just how slowly the gender pay gap is closing. They have done some research – and it’s in their 2020 report (Global Gender Gap Report) so it's a couple years old now. They found that at the rate things are going, it will take another 99.5 years to achieve gender parity around the world. The US ranks 53 in the 153 countries in the report. I've seen in my lifetime a closing of the gender pay gap, but we've still got a long way to go – and hopefully can accelerate that.

There are also other contributing factors that are inhibiting women's ability to achieve a secure retirement. We've talked about the gender pay gap. Women, societally, are also more likely to take time out of the workforce for parenting and caregiving – all these things negatively impact women's earnings, which in turn impacts her ability to save and the growth of her savings over a long-term career.

So, as we look at moments in time, we may see differences between women and men, but the different life trajectories over a course of a 20 or 30- or 40-year working career leave women with far fewer in terms of retirement savings and benefits compared with men.

Everybody is at risk of not achieving a secure retirement, but the risks are even greater for women. It's just so important that we're having these conversations, especially on International Women's Day so that we can affect positive change.

Al Waller: Absolutely, as you know, those are some mighty significant headwinds for women – and let's face it, women do take time away from work to start and raise families, that more than likely are going to derail or suspend their career trajectory, which you know at the end only serves to widen the pay gap.

With that said, I'd like to think we can hopefully reach a consensus on the importance of achieving change – focused on diversity, equity, and inclusion.

Given your team has conducted a global retirement survey for the past ten years, what I'd really be interested in learning more about is what you've uncovered in that research.

Catherine Collinson: Our Transamerica Center for Retirement Studies team has collaborated with Aegon on the Aegon Retirement Readiness Survey for 10 years now. It's a global retirement survey that looks at various factors of retirement preparedness in 15 countries around the world – and we've also looked at the data in terms of how women and men compare.

Let me share with you some highlights from the 2021 survey that we conducted. As we look at life and retirement around the world, countries have very different retirement systems and what we found in the 2021 survey is women globally and in the US are generally optimistic about retirement. When we asked for word associations, the top three word associations that came up are leisure, freedom, and enjoyment. So, that's good news that women are looking at retirement in a positive light.

Women also share retirement dreams around the world, and those dreams include things like spending more time with family and friends, traveling, and pursuing new hobbies. The US and global results are quite similar.

Al Waller: Well, that's encouraging, especially noting that a lot of women carry a relatively positive view of retirement and actually look forward to being active.

But then again, we've discussed some fairly significant risks and realities for women. How do you see those playing out?

Catherine Collinson: Well, their concerns are well founded. The survey yielded some alarming findings. Globally just 22% of women workers and 31% in the US think they are on course to achieve their retirement income expectations. Regarding confidence specifically, few women are extremely confident in their ability to fully retire with a comfortable lifestyle. The response rate there is, globally 10 percent are extremely confident and in the US that number is 20% so only 1 in 5.

Al Waller: Well, you've covered a lot of the difficulties and the challenges women face. What sort of counsel would you offer women to help them improve their outlook in the future?

Catherine Collinson: Over the years that Transamerica Center for Retirement Studies has been collaborating with Aegon, we have developed what we call the 5 Fundamentals for Retirement Readiness 5 things that people can and should be doing that can help improve their retirement outcomes. These apply to both women and men, but since it's International Women's Day, we are going to focus on women. If you're game for it, I would like to take you through each of the 5 fundamentals.

Al Waller: What’s the first fundamental, Catherine?

Catherine Collinson: The first fundamental is to start saving early and save habitually for retirement. The best route to retirement readiness is saving as early as possible, consistently over time, and becoming what we call a “habitual saver” – someone who makes sure they are always saving for retirement.

Only 41% of women workers globally say they're habitual savers. In the US, I'm pleased to share the response rate is much higher with 55% self-identifying as habitual savers.

Al Waller: Catherine, though I don't want to interrupt you here, that still seems like a pretty significant difference. What's behind all of this?

Catherine Collinson: Well, one of the things that we've seen here in the US, and behavioral economists and behavioral finance academics have also shown, is that having access to workplace retirement benefits and defined contribution plans – what we know as 401(k) or similar plans – these make a big difference in terms of engaging people to start saving for retirement and to continue saving over their working lives.

In the global survey, we've seen that the US and other countries like the UK that offer these kinds of plans – if they automatically enroll participants into the plan, eliminating the paperwork needed to join – see much higher levels of savings rates and what we call “habitual savers”.

Al Waller: The path of least resistance does tend to be the nudge people need to get started saving for retirement.

What are some of the other fundamentals that you'd like to share with us?

Catherine Collinson: The next two should come as no surprise because they're all about having a roadmap – and that's what we do on ClearPath – Your Roadmap to Health & Wealth. I like to say it's impossible to chart a course if you don't have a destination in mind – and that's why your roadmap for retirement is so important.

Fundamental number two, develop a written retirement strategy. Only 17 percent of women workers globally have a written plan for their retirement and 30 percent of women workers in the US.

There are more who say they have a plan that's not written down. It's good they're thinking on those terms, but it's even more important that they put those plans in writing. Those plans are particularly important so you can measure your progress along the way and if you find yourself veering off course, you can make some course corrections over that journey we call life.

A related fundamental, which is our fundamental number 3, is to have a backup plan for unforeseen events. Over the course of our lives, life will throw us curve balls. We don't know when they'll come, and we don't know what they are – but if there is anything we have learned, it's important to expect the unexpected and have backup plans and contingencies in place, especially if we are at risk of retiring sooner than expected or planned.

Globally, just 34% of women workers – that's 1 in 3 – have a backup plan for retirement income if they're unable to work before retirement. The good news is, that number is slightly higher in the US. 45% of women workers say they have a backup plan.

Al Waller: What gets measured or written down does tend to get done. How about your final two recommendations?

Catherine Collinson: Saving and planning for a long and healthy and prosperous life is much more than a mathematical, financial equation. Of course, saving and planning and investing for the long term is very important, but it is also equally important that we factor in lifestyle considerations.

The final two fundamentals relate to lifestyle. Fundamental number 4 is adopt a healthy lifestyle. The daily decisions that we make over the course of our lives can impact our health as we get older. Taking good care of our health can better our chances of being able to continue working, earning income, and saving as long as we want and need.

Our survey asked people about their top life priorities. 61% of women globally and in the US said being healthy and fit is a top priority. That's good news. It would be great if we saw that percentage higher – say at 100% – and that we're all mindful and that we're taking care of ourselves each and every day.

The fifth and final fundamental is embrace lifelong learning. A commitment to continuing education is vital for keeping our skills up-to-date and relevant – gaining knowledge so that we can make informed decisions in this crazy world of fast-paced change that we're living in. It is dizzying how quickly the world is changing and we all have to embrace our inner curiosity and keep learning. We've got to keep up with the times regardless of what our primary goals are – if they're working, if they're family, or if there are other long-term goals that we have in mind.

On this note regarding lifelong learning, the survey uncovered a huge opportunity. Many people simply are not thinking on these terms yet. So, globally only 31% of women said that pursuing lifelong learning is a top life priority, and the number is even fewer in the US at only 24%.

Al Waller: Excellent points all around, Catherine, and as always thank you for joining us today. I honestly believe these insights and suggestions can really go a long way in assisting women improve their retirement outlook. And I might add, I'm delighted we were able to celebrate International Women’s Day together.

ClearPath – Your Roadmap to Health & Wealth is brought to you by Transamerica Institute, a nonprofit private foundation dedicated to identifying, researching, and educating the public about retirement security and the intersections of health and financial well-being. You can find our weekly podcast on WYPR’s Partner Content and mobile app, wherever you get your podcasts, and at transamericainstitute.org.

We hope you’ll join us for future episodes, including the upcoming episode on sleep awareness. Also, in case you missed it, check out recent episodes on aging in place and avoiding surprises in your medical bills.

We’d love to hear from you if you have comments, feedback, or topics you want to learn more about. Contact us at [email protected].

The information provided here is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical, or financial advice or guidance.  

Until the next time, I’m your host Al Waller. Stay safe, be well and thanks for listening.

Clearpath is produced by Transamerica Institute with assistance from WYPR.

Al Waller is a long-time Baltimore native and employment expert with a 30-year career in leading and advising locally and globally based corporations on matters including: Talent Acquisition and Retention, Employee Relations, Training and Development.
Catherine Collinson is the founding president and CEO of nonprofit Transamerica Institute and its Transamerica Center for Retirement Studies, and she is a champion for Americans who are at risk of not achieving a financially secure retirement. With two decades of retirement industry-related experience, Catherine is a nationally recognized voice on workforce, aging, and retirement trends. She was named a 2018 Influencer in Aging by PBS’ Next Avenue. In 2016, she was honored with a Hero Award from Women’s Institute for a Secure Retirement (WISER) for her tireless efforts in helping improve retirement security among women.