There is a significant gender gap that exists in financial wellness.
Liz Davidson, CEO and founder of Financial Finesse, says “there is a 28 percent gap in the additional retirement savings needed to cover estimated retirement expenses primarily due to women’s greater life expectancy.” The increased likelihood of millennial women leaving the workforce during different points in their careers makes saving for retirement early and often an important goal. There’s a gap between women who remain in the workforce their entire careers and women who take breaks for important life events such as raising children.
Women need to be saving more and at a faster pace than men to meet their retirement income needs. Women tend to have lower confidence levels when it comes to personal financial matters. This suggests that efforts to improve financial wellness should focus on improving financial knowledge and confidence in order to promote smarter financial decision-making. Employers who offer workplace financial wellness programs are in a unique position to help female employees gain these practical skills needed to improve financial confidence.
It’s important to leverage retirement plan design features, but don’t rely on them solely. More companies now offer automatic enrollment to their workers, but reports of lower deferral rates for employees that are automatically enrolled in their retirement plan is a sign of concern. To encourage saving more for retirement, employers should add automatic contribution escalation to their plan design and couple it with basic money management education to help reduce opt-out rates.
Provide unbiased financial guidance that is easy to understand and in a nonthreatening environment. According to Prudential’s 2014-2015 Research Study on Financial Experience & Behaviors among Women:
36% of women report they are not adequately prepared to make effective financial decisions because they are not sure what to consider when evaluating their options.
28% of women say they are reliant on their employer for important information about financial matters including retirement products and services.
Only about 20% of women believe the financial services industry truly hears their needs. Women prefer less financial jargon and a greater sense that someone is truly looking out for their needs.
Provide all employees with access to a financial wellness program. Research has demonstrated that a workplace financial wellness program, coupled with innovative benefits improvements, brings knowledge and confidence to all employees.
This then leads to reduced absenteeism, higher productivity and morale, lower healthcare costs and fewer delayed retirements. Financial wellness programs should be a benefit with equal access for all employees regardless of compensation and it should include online resources as well as personal interaction. Since many employees struggle with their schedules outside of the office, promoting access to basic money management and investment education during work hours will increase program utilization and show employees their employer stands behind its commitment to improve financial wellness.
The gender gap in retirement savings is a real concern and employers are in a prime position to help both men and women improve their financial wellness. Since women have more obstacles along the journey to retirement, employers need to design opportunities that specifically address the additional challenges that they face.