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Embrace Equity for Women’s Retirement Security

Embrace Equity for Women’s Retirement Security

Al Waller: Women have made tremendous progress in recent decades in terms of educational attainment and career opportunities, yet they continue to be at greater risk than men of not achieving a financially secure retirement.

Welcome back to ClearPath – Your Roadmap to Health & WealthSM. I’m your host, Al Waller. Joining me is Catherine Collinson, founding CEO and president of nonprofit Transamerica Institute® and its Transamerica Center for Retirement® Studies to discuss the unique risks faced by women, share her team’s research findings, and offer insights and recommendations to improve their retirement outlook.

Before we get started – a reminder that we would love to hear from you and learn what topics you would like us to cover or give us feedback on this episode. Please drop me or Catherine a note at [email protected].

Catherine, I’d like to jump right in. You and your team have been focused on this topic for 17 years and counting. Why do women face greater retirement-related risks? And why is it important that we focus on it right now?

Catherine Collinson: Today’s women in the workforce enjoy opportunities that our grandmothers’ generations could only dream about, but they continue to be at even greater risk of not achieving a financially secure retirement. This is due to societal headwinds, such as the persistency of the gender pay gap, time out of the workforce for parenting and caregiving, and lesser access to employer and government benefits.

All of these factors negatively impact women's earnings, which in turn impacts their ability to save and the growth of their savings. Over the course of a working career that could last 20, 30, or 40 or more years, these factors could have a compounding effect that leave women with far less in terms of retirement savings and benefits compared with men.

Especially now, as we’re hopefully putting the pandemic in the rearview mirror, we must spotlight women’s longevity and retirement insecurities, so that we can address the issues and implement solutions.

Al Waller: Catherine, you and your team recently published an in-depth report on the retirement outlook of working women, Emerging from the COVID-19 Pandemic: Women’s Health, Money, and Retirement Preparations. Tell us about the report.

Catherine Collinson: Our report delves into the retirement prospects of women workers by looking at their current financial situation and their long-term preparations – and highlighting the risks and potential opportunities. It is based on a survey of employed workers of for-profit companies and offers comparisons of women and men.

Al Waller: The pandemic and economy have been enormously challenging. What did your research find about their financial situation?

Catherine Collinson: Women workers have weathered a formidable financial storm. Many experienced negative employment impacts that could jeopardize both their short-term finances and future retirement. Let me share some data points that illustrate their situation:

  • Almost four in 10 women workers (37%) experienced one or more negative impacts to their employment as a result of the pandemic, including reduced work hours, reduced salaries, furloughs, and layoffs.
  • Forty-four percent of women workers are having trouble making ends meet.
  • Fifty-eight percent cite paying off some form of debt as a financial priority. Other financial priorities include saving for retirement (50%), building emergency savings (38%), and just getting by to cover basic living expenses (31%).
  • Emergency savings are low. Women have only $2,000 (median) in emergency savings.

Al Waller: You’ve got my attention. These findings are very concerning. I’d like to explore something you briefly touched on earlier and on previous episodes of this podcast – and that is caregiving. How does this factor into their situation?

Catherine Collinson: Excellent question, Al. Our survey found that almost four in 10 women workers (38%) were either currently serving or had served as a caregiver in the past for a relative or friend during the course of their working career (excluding parenting responsibilities). Of the women caregivers, the vast majority of them (84%) adjusted their employment situation as a result, including missing days of work (35%), reducing hours (25%). Some even gave up a promotion (7%) or quit their job (10%).

Al Waller: Well, during my years spent in corporate human resources, I can confirm the fact that the sacrifices you referenced are real. As you point out with comparatively few exceptions, women are really the ones that are carrying the water in these cases.

Now that we’ve discussed women’s current situation, it’s becoming quite clear to me how difficult it is for them to focus on the future. Let’s take a deeper dive into their preparations. How are women doing in terms of saving for retirement?

Catherine Collinson: We have mixed news. The good news is that most women are saving for retirement. Almost three in four are saving (73%) through an employer-sponsored 401(k) or similar plan and/or outside the workplace.

However, the not-so-good news is many are not saving enough. Women workers have saved only $43,000 in all household retirement accounts – compared with the $91,000 saved by men. Looking at Baby Boomers, the generation nearing and entering retirement, women workers have saved $101,000 which is less than half of the $248,000 saved by men (estimated medians). Although these amounts may sound like a lot to some people, this level of savings may not go too far in a retirement that could last 20 or 30 or more years.

Al Waller: These numbers are sobering for both women and men. Since this episode is focusing on women, what are their expectations about retirement income?

Catherine Collinson: Almost three in 10 women workers (28%) expect to primarily rely on Social Security when they retire, so, it’s hardly surprising that 76% are concerned that Social Security will not be there for them when they are ready to retire.

Al Waller: This is indeed alarming. As a way to help bridge savings gaps, are many women seeking to extent their working lives and retire at an older age?

Catherine Collinson: Yes. More than half (51%) expect to retire after age 65 or do not plan to retire – and 58% of women workers plan to continue working at least part-time in retirement. Although this may sound like a disappointment for them, it’s not all bad news. While most cite one or more financial reasons for planning to do so, almost as many cite healthy aging-related reasons such as wanting to stay active, enjoying what they do, and having a sense of purpose.

Al Waller: Do you think this is realistic? What is the likelihood of success?

Catherine Collinson: Great point – any plans to work longer and retire later are not necessarily a given. Our research on retirees finds that many retired sooner than planned, often due to employment and/or health-related issues – or caregiving. Women who plan to extend their working years need to be proactive about safeguarding their health and keeping their job skills up to date and in step with employers’ needs. It’s also critical that they have backup plans for life’s curve balls that could preclude them from working.

Al Waller: I completely agree with you on the need to be proactive. In my experience in HR consulting, I recall many situations where people were forced to retire sooner than planned – and they wish they had thought through a back-up plan.

At the top of this episode, we talked about societal headwinds faced by women. From a societal perspective, what can we do to help improve women’s retirement outlook?

Catherine Collinson: Everyone must embrace equity by breaking down barriers and creating a world in which everyone has the ability to achieve success. A woman’s ability to achieve a secure retirement ultimately depends on equitable pay throughout her working years, access to retirement benefits, and health and welfare benefits, and the preservation of safety nets such as Social Security and Medicare.

Achieving success requires a collaboration among stakeholders including policymakers, employers, and individuals to tackle these deeply rooted issues, and it requires modernizing our retirement system for current and future generations. If you are up for it, I would like to highlight some recommendations for each of these stakeholder groups.

Al Waller: I think you are bringing up some very important points here. So, absolutely Catherine, let's go for it.

Catherine Collinson:

  • Policymakers can implement reforms to Social Security and Medicare to ensure their future sustainability. Strengthening these safety nets is important for everyone and even more important for women, who are more likely to rely on them.
  • Employers can ensure gender pay equity. They can expand their retirement, and health and welfare benefits offerings for all their employees, including both full-time and part-time workers. They can also offer flexible work arrangements, which can help women maintain work-life balance and stay in the workforce.
  • Individuals can take greater control over their future by gaining a full understanding of their situation, creating a financial plan, setting goals, factoring financial implications of taking time out of the workforce, and developing a retirement strategy.

Al Waller: Thanks, Catherine, for your insights and recommendations for improving women’s retirement security. For our listeners who are interested in the research report we’ve discussed today, Emerging from the COVID-19 Pandemic: Women’s Health, Money, and Retirement Preparations, you can it find at www.transamericainstitute.org.

This episode of ClearPath – Your Roadmap to Health and Wealth is dedicated in honor of International Women’s Day, which is celebrated annually on March 8. It is a global day celebrating the social, economic, cultural, and political achievements of women. The day also marks a call to action for accelerating women's equality and embracing equity, because equity isn't just a nice-to-have, it's a must-have.

Until our next episode, stay safe, be well, and thanks for listening.

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 health and wellness, employment, financial literacy, longevity, and retirement. You can find our weekly podcast on WYPR’s website and mobile app, wherever you get your podcasts, and at transamericainstitute.org/podcast.

ClearPath – Your Roadmap to Health & Wealth is produced by the Transamerica Institute with assistance from WYPR.

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.

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.