I have enjoyed recent coverage related to the 100th anniversary of the 19th Amendment, which was signed in 1920 to culminate a successful women’s suffrage movement that began decades earlier. It has reinforced for me how hard women have worked and how long we have persevered to make many significant gains over the years.
However, one recent projection from the World Economics Forum demonstrated how far we still have to go: Based on current trends, it will take another 99.5 years before the global gender gap — as measured by disparities between women and men in the key areas of economic participation, health, education and politics — is closed (Source: Word Economic Forum, Global Gender Gap Report 2020, December 2019). In my opinion, another century is far too long to wait.
The good news is we have the power to improve current trends. To me, this means making a difference today where we have the greatest expertise and influence. Those of us in the financial services industry can do our part by helping eliminate one critical component of the overall gender gap — the gender retirement gap. This is not only critical to supporting women’s ability to live financially secure lives, it represents one of our industry’s greatest opportunities. The fact October is National Retirement Security Month makes now an excellent time to commit to this very important goal.
It's No Secret — Women Face Unique Retirement Challenges
Women control 51% of the personal wealth in the U.S. — an estimated $22 trillion — a number that is expected to jump by 30% over the next 40 years (Source: New York Life Investments, Women and Investing, March 2019). Additionally, our participation in the global workforce keeps increasing as does income (Source: Ernst & Young, Women and Wealth — The Case for a Customized Approach, 2017). Due to these and other factors, we represent the next wave of growth in wealth management.
For a host of well-documented reasons, however, women have lower lifetime earnings than men, which makes it harder to save for retirement (Source: The Brooking Institution, How Does Gender Equality Affect Women in Retirement, July 2020). In fact, women are nearly two times more likely than their male peers to have no money at all set aside for retirementdespite outliving men by six to eight years on average (Sources: Laurel Road, Survey: Lacking Personal Finance Education Contributes to Fiscal Woes Later in Life; Millennials Seek Recourse, March 2019 / World Health Organization, Global Health Observatory, Female life expectancy, September 2020).
Many women also lack confidence in their financial decision-makingand their ability to live comfortably in retirement, which may exacerbate their retirement savings challenges (Sources: Allianz Life, Despite Rising Influence, Women Report Steady Decline in Financial Confidence, June 2019 / LIMRA, The Facts of Life and Annuities, 2019 Update, 2019). A recent study by the Alliance for Lifetime Income found only about 40% of women between the ages of 25 and 74 believe their retirement savings will last their lifetime, compared to more than 50% of men (Source: Alliance for Lifetime Income, Women Are More Concerned Than Men About Outliving Their Money, November 2019).
The Covid-19 pandemic is also posing new retirement challenges for women. Nearly 25% of women surveyed say their retirement confidence has declined due to the pandemic and just 17% are very confident they will be able to fully retire with a comfortable lifestyle (Source: Transamerica Institute, Retirement Security for Women Amid Covid-19, August 2020).
Changes in school schedules and new approaches to caregiving are also forcing some of us to leave the workforce or decrease our hours, risking even longer-term impacts to our finances and careers (Source: The Wall Street Journal, Women’s Careers Could Take Long-Term Hit From Coronavirus Pandemic, July 2020). The Census Bureau reports one in five adults are not working during the pandemic due to childcare demands and women are three times more likely than men to be affected (Source: United States Census Bureau, Working Moms Bear Brunt of Home Schooling While Working During Covid-19, August 2020).
Better Retirement Outcomes Mean Adopting A Customized Approach With Women
Financial professionals are uniquely positioned to help women address these challenges and provide the expert guidance needed to achieve better retirement outcomes. As current economic conditions contribute to more people seeking financial advice — many for the first time (Source: InvestmentNews, Pandemic fallout sends consumers racing toward financial planners, April 2020) — now is an ideal time to have an outsized impact that can also provide a blueprint for working with other growing customer segments such as millennials and Gen Xers.
Successfully connecting with more women means abandoning the one-size-fits-all investing approach. Ernst & Young notes that despite the relative complexity of women’s financial lives, many wealth managers view gender segmentation as having minor importance (Source: Ernst & Young, Women and Wealth: The Case for a Customized Approach, 2017). This has led many female investors to feel unwelcomed and even alienated by the investment industry (Ernst & Young, Women and Wealth: The Case for a Customized Approach, 2017). This may be why only 25% of working women report using a financial professional to help manage their retirement savings (Source: Alliance for Lifetime Income, Women Are More Concerned Than Men About Outliving Their Money, November 2019).