Women, retirement and what still needs to be done

Apr 29, 2023
  • BlackRock

It’s well studied that factors like debt and financial uncertainty impact the way people feel about retirement and prepare for it. In this series, BlackRock explores insights from our 2021 DC Pulse research and additional work with the Employee Benefit Research Institute (EBRI) to recognize inequitable effects and find ways to build a better retirement for all.

The wage and wealth gap for women is well known, and the retirement savings gap is just as pronounced, especially since it spans across racial and income lines.

Understanding the factors that perpetuate this gap could help lead to solutions. In 2021, BlackRock fielded our 2021 DC Pulse survey and sponsored another, the 2021 EBRI Retirement Confidence Survey, both of which uncovered insights about women and retirement. This research is particularly germane, since women often live longer and typically enter retirement with lower asset balances.

Resolving this issue is multifaceted, but we in the retirement industry can work to improve it by:

  • Increasing access to retirement plans
  • Increasing the prevalence of lifetime income options in retirement plans

“We cannot afford to overlook the fact that the retirement crisis is a women’s crisis – one that has been exacerbated by COVID,” said Anne Ackerley, who is Head of BlackRock’s Retirement Group, in a LinkedIn post.

People want to save for and have a comfortable retirement, but unfortunately, competing financial priorities often detract from that goal. Between the EBRI data and BlackRock’s DC Pulse research, a few themes emerged.

Saving is a priority

It’s important to note that regardless of income or ethnicity, data from the 2021 EBRI Retirement Confidence Survey found that very few people, both men and women, said that other financial goals are more important than saving for retirement. Only a third of people surveyed felt that retirement savings was not a priority relative to other needs.

The other good news is that according to the EBRI data, when offered a workplace retirement savings plan, workers of both genders -- regardless of household income and race -- take advantage of it at fairly similar rates. More than 4 in 5 workers who are offered a workplace retirement savings plan are satisfied with the benefit, according to EBRI.

Retirement readiness

59% of women versus 78% of men were more likely to say they are unsure if they are on track for retirement, according to the DC Pulse survey, which may be influenced by concerns about outliving savings. In fact, 63% of women compared to 55% of men are worried about outliving their retirement savings, according to DC Pulse.

Encouragingly, women are more willing to take steps to try to mitigate any savings deficits that are within their control. 84% of women compared to 59% of men were more willing to save extra now in order to be completely assured that they have enough for retirement later, according to the DC Pulse survey.

BlackRock’s To Spend Or Not To Spend paper highlights similar sentiments. Retired women report higher levels of financial worry and are more risk averse than retired men. As a result, men are more likely than women to spend consistently throughout retirement (48% vs. 38%) and allocate their investments differently. Men are prone to allocate more of their assets to stocks while women are more likely to invest in asset allocation mutual funds and annuities.

Racial and income discrepancies

The data collected from EBRI took a deeper look at racial and income-level nuances. Notably, Black and Hispanic women in the lowest household income group surveyed, which earned less than $35,000 a year, were significantly behind their male co-workers and retirees in the same income group when it came to having personally saved for retirement. Only 24% of Black women vs. 40% of Black men surveyed had personally saved. 31% of Hispanic women surveyed had saved vs. 42% of Hispanic men.

While we know that women tend to have fewer retirement assets than men, it’s typically because the wealth gap means they have lower income to save from, not necessarily because of their willingness to save. It’s a problem that’s exacerbated for women of color, because they tend to earn less than men of the same race.

Securing retirement

The good news is that when a retirement plan is made available via an employer, workers take advantage of it, across incomes levels, according to the EBRI data. 88% of all the people surveyed reported that they contributed to a workplace retirement plan when one was offered, reinforcing the idea that access is key when it comes to helping people save.

Factors such as lower wages and household responsibilities can affect how much women are able to save for retirement. Despite this, women are willing to save, and sometimes more aggressively than men.

But more needs to be done in order to help assure that woman can retire with dignity. Offering the option for secure retirement income, outside of social security, can help ensure the savings that they do amass is managed smartly and not outlived.