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Help Your Women Retire

Studies and experts confirm men are in better positions to manage money and prepare for retirement, which puts some of the onus on employers to guide their female employees into viable existences for the remainder of their lives.

Thursday, April 24, 2014
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There's continually mounting evidence that women are having a much tougher time than men when it comes to managing their money and planning for a viable financial future into -- and through -- retirement.

A new voice in this troubling chorus is a March 31 piece that aired on NPR titled "When Planning for the Future, Women Have Been Hands Off." The segment brings to light the fact that, not only do women earn less than men and often take breaks in their careers to care for children and parents -- breaks that negatively impact salary progression and Social Security -- they're also fearful and hesitant about handling money in general.

"Women are terrified of retirement," says Cindy Hounsell, president of the Women's Institute for a Secure Retirement, in the NPR report. "They're terrified of running out of money. They're terrified of becoming bag women."

That possible reality was brought home last year in Cate Blanchett's Oscar-winning performance in the movie Blue Jasmine, about a wealthy New York socialite who loses it all and ends up sitting, delusional, on a park bench.

Even when women do seek out financial advice, Hounsell says, they're turned off by it. "We don't want wealth-management gobbledygook that we can't understand," she tells NPR correspondent Jennifer Ludden. "A lot of the studies show that women want somebody they can talk to who will say, 'How old is your mother?' and 'Who is caring for her?' and all those things. Well, they haven't been trained like that." On the contrary, she says, they're steeped in industry jargon and are, for the most part, older white men.

Confidence, or lack thereof, is also a factor in women's approaches to retirement. A study released last year, in March 2013, by the American United Life Insurance Co., a OneAmerica company -- OneAmerica Retirement Plan Participant Survey -- finds 45 percent of men, yet only 33 percent of women (out of a total of 6,360 respondents), said they were either "confident" or "very confident" when asked if they believe they will be able to retire and maintain their current lifestyle.

Working further against the financial picture for women in retirement is the fact that – according to new research from the Society for Industrial and Organizational Psychology – men are significantly more likely to stay in the workforce and earn supplemental income after they retire than women. SIOP plans to release that study at its annual conference in May.

What they're being paid when they're both working factors in too. An analysis released April 7 by the Institute for Women's Policy Research confirms women earn less than men in almost all of the 112 occupations for which the U.S. Bureau of Labor Statistics publishes weekly full-time earnings data for both genders.

In at least 101 of the 112 occupations, women made substantially less than men, and in 17 of these, they made at least 25 cents less per dollar.

"I do think women are at a distinct disadvantage when it comes to retirement planning," says Julie Stich, research director at the International Foundation of Employee Plans in Brookfield, Wis. With career breaks crimping Social Security and pension benefits, still earning less than men, and the general knowledge that women tend to outlive men, she says, they're coming at this retirement challenge with lower confidence and less to show for their efforts "off the bat."

The research bears it out, Stich says, that "women are more uncomfortable with investments; they don't necessarily have the financial education they need."

Which, of course, is where plan sponsors and human resource executives come in. Stich offers specifics – many of which are well-known and well-practiced -- they can do to help women, such as:

• Automatic enrollment with automation escalation,

• Some kind of lifetime-income distribution,

• A matching contribution to a 401(k),

• Access to other forms of insurance such as disability,

• Lifetime flexibility "so they can actually work longer," she says, and

• Face-to-face guidance and retirement research.

"Start out talking to them, start out simply, start out with a lunch and learn," says Stich. "Maybe bring in your retirement-investment provider [to offer advice on ways] to save money, even while you're still paying off college or credit-card debt.

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"I do think if they have access to information, they're not so hopeless," she says.

The little bit of hope Stich does see lies in the fact that women tend to be the planners in the family and have been shown to be "good about putting money away."

El Segundo, Calif.-based Financial Finesse would concur with this. In its 2013 study titled "Gender Gap in Financial Literacy," it did find women are gaining ground when it comes to key areas of investing while men appear to be showing initial signs of a backslide.

In particular, the percentage of women who performed a fee analysis on their portfolio increased by a factor of 50 percent from 2012, while the percentage of men who reported the same actually decreased by a factor of 29 percent. In addition, the percentage of women who reported rebalancing their accounts to keep their asset allocation plans on track increased by a factor of 16 percent, while the percentage of men who reported the same decreased by a factor of 12 percent.

"We believe ... that women actually improve their investing habits and behaviors in a strong market, which we experienced in the first quarter of 2013, while men backslide and begin to ignore the risk-management controls they originally put in place ... ," the report states.

That said, though, there is still a gap between men and women in overall money awareness and retirement readiness, and women are still getting the short end of the stick. As Liz Davidson, CEO of Financial Finesse, writes in a 2011 piece, "Are You Leaving Your Female Workers Behind?" in Benefits Magazine, "More women are actively employed than ever before, more women are at high risk of not being able to retire on time and women need more help than men in gaining a knowledge and understanding of their benefits and finances.

"So it seems obvious that employers should be defaulting their communication and education efforts to a standard that reaches women and successfully helps them manage ... ," she writes. "The gender gap is not an easy problem to solve as women start out with significant disadvantages from a demographic perspective – earning less, living longer and, in most cases, retiring alone.

"But it is solvable with the right strategy and an ongoing commitment to approaching benefits communication as a personalized, holistic process that ties the employer's benefits to employees' specific financial goals," she continues.

"There is a cost to taking this approach," Davidson writes, "but the cost of leaving female workers behind is much greater – for the employer, for them and for the society as a whole."

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