The retirement crisis is a women’s crisis

Apr 5, 2023
  • BlackRock

The retirement crisis is a women’s crisis. Women’s retirement balances are typically 30-40% lower than those of men.1 Pay disparity, career gaps and the fallout from COVID-19 all affect how much women save, and how secure they’ll feel in retirement. This retirement readiness gap widens even further when you look along racial and socio-economic lines.

In a past interview on BlackRock’s The Bid podcast, Anne Ackerley, Head of BlackRock’s Retirement Group, talked about women, saving and how the retirement industry can better serve future generations.

Anne was joined by Liz Koehler, Head of BlackRock’s US Wealth Advisory Advisor Insights Team, as well as Karen Andres, Project Director for Aspen Institute's Retirement Savings Initiative.

We’ve summarized some of Anne’s insights here

When COVID began, there were abrupt and fundamental changes to our work, school, and childcare. Even now, we’re still seeing its after-effects as these changes continue to evolve and more come after. How has all the impacted retirement planning for women?

Even before the pandemic, retirement planning for women was challenging. There are a lot of reasons for this. There’s the well-known gender wage gap. Women, on average, make 82 cents for every dollar a man earns. Even if they’re saving the same percentage as men, in absolute terms it’s going to be lower than men, and that compounds.

Women are also in and out of the workforce more than men, due to child and elder care, so there may be periods where they aren’t earning money and saving. With less time in the workforce, it’s likely many women miss out on valuable contributions to their 401(k) plans as well as an employer match, if it was available.

That’s where we started from, and then we added a pandemic. It was hard for everyone, male and female, but we know that women disproportionately lost jobs during the pandemic, given the jobs that women are often in, such as retail or in the service industry. There were also childcare issues, and many women were forced to leave their jobs.

During the pandemic, we hit the lowest participation rate for women in the workforce since 1988. It’s starting to come back, but there are still fewer women in the workforce than there were pre-pandemic. Those are women who aren’t saving, and that’s a real challenge. Even just a few years out of the workplace and not saving compounds into lost potential returns.

The Bid

3 ways to close the gender retirement gap

Women are falling behind when financially preparing for their futures. Anne Ackerley, Head of BlackRock's Retirement Group, and Karen Andres, Project Director for Aspen Institute's Retirement Savings Initiative break down the challenges facing women and retirement and how the industry can change to be more inclusive.

The Bid podcast /
The Bid podcast /
3 ways to close the gender retirement gap

Research shows women are better savers and better investors, but BlackRock’s 2021 DC Pulse survey showed that women were not as confident when it came to planning for their retirement compared to men. Why do you think that is?

When it comes to retirement, 59% of women, compared to 78% of men, feel they are on track.2 That’s a pretty significant difference. There are a few reasons why women may feel less prepared. I think that this is a more challenging-- in some ways different -- equation for women. We just touched on some of the reasons related to the pandemic, including gaps from the workplace, lack of pay equity and missed contributions to retirement plans.

That’s compounded with the fact that women live longer on average, about five years,3 and retire earlier. That means they need to fund more years in retirement. BlackRock’s DC Pulse survey also found that 64% of women are worried about outliving their retirement savings.4 It’s easy to understand why women may be less confident when they’re asked to do more with less.

One thing we noticed when women often have these lower balances, it isn't because they're investing in something different or they're more conservative. So much of retirement savings goes into the 401(k) and into target date funds, that the differential is really due to these other factors, not in how women are investing.

However, this is where I think the industry has done a good job in terms of having the target date fund as the default investment. Even if participants are not paying attention-- because they have so many things to do-- there is an investment that is making the appropriate investments.

What is the number one thing the retirement industry needs to do to better serve women and future generations?

Access is the number one thing. We know that when people have access, they’re 15 to 20 times more likely to save.5

When I took over as Head of the Retirement Group at BlackRock eight years ago, I was shocked to learn that there is no rule in the U.S. that employers need to provide a retirement plan. That said, at least 55 million Americans don’t have access to a workplace retirement plan.6 Innovation and technology have made the costs of implementing these plans less of a burden, even for small businesses and start-ups.

I would also call on companies and the government to eliminate the gender pay gap. Some of that pay gap is due to some of the industries that women go into, but I think we need to work harder in the United States to get pay parity.

Listen to the podcast