Women need to save more, sooner and invest more aggressively for their retirement — here’s why

By Jessica Hall

According to a new report, women who take the time to care for family members are rewarded by seeing their retirement savings reduced by up to 35% and possibly ending up retiring earlier than expected.

Many American women are struggling to save adequately for retirement in the face of competing work and family responsibilities, according to the Goldman Sachs Retirement Survey & Insights Report 2022, Navigating the Financial Vortex: Women & Retirement Security.

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Throughout their careers, women are more likely than men to juggle caregiving responsibilities that eat away at their retirement savings. These care tasks can also shorten careers, with more than 60% of women surveyed saying they retired earlier than expected, with two-thirds of this group doing so for reasons beyond their control.

“Women are more often than men forced to work part-time, spend time out of the workforce to care for young children and elderly family members, and juggle other financial priorities at their careers,” said Candice Tse, global head of strategic advisory solutions at Goldman Sachs Asset Management. “It can make their journey to retirement more difficult and incredibly personal.”

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The time spent out of the labor market to care for the family contributes to the financial difficulties of many women. For example, two four-year spells out of the workforce (one in mid-career and one later) can reduce retirement savings by up to 35%, according to the report.

“When it comes to retirement, your plan needs to be very personalized and personalized and take into account what you’re saving for and your competing priorities,” said Mike Moran, senior retirement strategist at Goldman Sachs Asset Management.

Given the potential disruptions in careers, as well as the gender pay gap in which men tend to earn more than women, women may need to start saving earlier, save more aggressively and take on more investment risk in their portfolios, Moran said.

In addition, American women live on average three years longer than men and therefore generally need more savings to finance their retirement.

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According to the report, more women (50%) than men (35%) said their retirement savings were behind schedule. Almost a quarter of women said they were “very late”, compared to 14% of men.

As for retirement itself, 50% of men said they retired earlier than expected, but this percentage rose to 61% for women.

Only 15% of women said they retired because their “savings were enough to fund my retirement” compared to 25% of men. The 66% of women who retired for reasons beyond their control most often cited health reasons (29%), caring for family (16%) or that their job was no longer available (15%).

Despite the complications of managing retirement savings versus starting and stopping careers, women are not turning to outside resources for advice. Although women consider financial advice important, they tend to turn to their family members for answers, according to the report. After family, women can seek assistance from their employer’s retirement programs, Moran said.

Financial advisors are not a resource of choice for women.

“The difference in how these resources are used highlights the gap between retirement advisors and their ability to meet women where they are,” said Chris Ceder, senior retirement strategist at Goldman Sachs Asset Management.

The data indicates that the financial industry and employers may need to modify their offerings to better support women, Moran said.

Employers may need to consider larger paid family leave benefits, more flexible transitions to the labor market after furloughs and childcare services to help women stay on the job, Moran said.

“Women have unique investment and retirement savings needs,” Moran said. “How can we help women continue to work and save? »

-Jessica Room

 

(END) Dow Jones Newswire

12-10-22 1449ET

Copyright (c) 2022 Dow Jones & Company, Inc.

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