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A Female Focus on Retirement

Women face an uphill climb when it comes to saving for retirement. How can employers help them become retirement-ready? 

Wednesday, February 24, 2016
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A longer life expectancy, lower wages, and a greater tendency to step out of the workforce to raise children or care for ailing parents -- these and other factors have created a "perfect storm" when it comes to women's retirement readiness. Less money earned throughout their lifetime equates to decreased Social Security payments, yet a greater percentage of women rely on Social Security as their primary source of funding for their golden years, according to the Washington-based Women's Institute for a Secure Retirement (WISER). Meanwhile, living to a ripe old age typically results in higher medical costs.

While it's clear that a woman's need to save for retirement is paramount, the reality of the situation is concerning. By the time she reaches retirement age, the average working woman has saved just 59 percent of what the average working man has set aside, according to the U.S. Government Accountability Office in Washington. The result is nearly twice as many senior women living in poverty than their male counterparts, according to WISER research.

Unfortunately, all of these factors have not motivated employers to take action to help female employees ensure their retirement readiness. Globally, just 9 percent of organizations offer women-focused retirement and savings programs, according to the second annual When Women Thrive research report issued by New York-based Mercer. That number ticks up slightly, to 14 percent, among U.S.-based and Canada-based companies, but overall, the findings are bleak, according to Betsy Dill, a partner in Mercer's Los Angeles office.

"Organizations have adopted a bit of a one-size-fits-all mentality in the way benefits are put together and communicated to employees," says Dill. "They are not taking into account the specific needs of the different segments of the workforce."

The hesitancy to offer programs geared toward one specific population is often rooted in concerns over being criticized for excluding others, says Cindy Hounsell, president of WISER. Budget cuts have also prevented many organizations from offering more targeted financial education, leading to a more broadly-focused approach, says Heather Tredup, a partner and retirement best practices leader at Aon Hewitt in Lincolnshire, Ill.

"Employers are asking, ‘How do I take one message and reach people as broadly as possible?'" says Tredup. "Offering a course that appeals to a broader spectrum is more appealing than one that is designed for just one group."

Tredup suggests HR partner with advocacy groups, like Women in Leadership, to sponsor seminars or other educational events, but maintain an open door policy that allows anyone in the organization to attend.

While men might also benefit from the message, a "woman-focused" program may carry a slightly different focus, says Dill, as such programs are built around "an understanding that women have a different set of issues" when it comes to retirement readiness. Generally speaking, participation is not an issue, as women readily partake of their employers' savings vehicles. In fact, participation rates in employer-sponsored retirement plans are nearly equal, with 73 percent of women and 77 percent of men reportedly contributing, according to the Voya Retirement Research Institute report, What About Women and Retirement? published by Windsor, Conn.-based Voya Financial. The problem lies in women's willingness to contribute up to the company match or be aggressive in their investment allocations, says Dill.

Women appreciate a holistic approach that takes into consideration all the factors that may be preventing them from saving adequately for retirement, says Hounsell. That may include money that is currently being diverted to other causes, like helping their adult children or elderly parents.

Face-to-face learning opportunities are generally most effective, says Dill, citing a "community learning aspect that happens with women." Gathering women together in person provides the added benefit of allowing younger female employees to learn from more-seasoned female employees who are usually comfortable talking about their priorities during different life stages, says Dill. That gives the younger women valuable insights into actions they should be taking to secure their own financial future.

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When designing a woman-focused approach to financial education, it's important to ensure that female employees don't feel singled out or patronized. This can be achieved by creating a "shame-free" environment in which women are comfortable sharing information and asking questions, says Holly Kylen, Voya retirement coach. She's found that women respond most favorably to offerings that focus on teaching financial literacy and enable them to have "intelligent conversations about money and their goals." In addition, Kylen has achieved success with simple techniques, like drawing a picture to illustrate the difference between a traditional 401(k) and a Roth 401(k).

"A simple drawing exercise allowed the knowledge to happen almost immediately, which in turn allowed my clients to make a better and informed decision," says Kylen. "I often tell my clients that a picture is better than talking a thousand words."

While the number of employers providing woman-focused retirement and savings programs may be abysmal at the moment, Dill is optimistic about the future. She expects a "big uptick" in such offerings, not only specifically geared towards women, but also towards other segments of the workforce.

Regardless of what approach an employer decides to take, Dill says, it's clear that helping female employees achieve retirement readiness is good for those individual women -- and for the bottom line.

"Organizations that take steps to address their women's financial well-being are organizations that perform better," she says. "If women are able to address their financial needs, they are going to be more productive at work, and if women are more successful, the business is more successful."

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