"Women face several unique challenges when saving for retirement," said Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America. "Between the gender pay gap and career disruptions from caregiving responsibilities, women often contribute less to their workplace plans and have fewer years to make contributions. However, one of the promising data points we found is that although men's average 401(k) account balances exceed women's by 50%, women in younger generations are working to close the gender savings gap. According to our data, there's only a 23% difference in account balances between millennial men and millennial women."

To continue closing that gap, financial education and empowerment need to be at the forefront of employers' minds, said Sabbia. Bank of America's research demonstrates that women feel confident in managing day-to-day financial tasks, but they feel less confident managing longer-term financial planning tasks, such as investing for the future, she said. With the right education, confidence should follow.

"Another important element is the company's culture," said Sabbia. "Employers must actively support the financial goals and development of all employees, and leverage employee resource groups. ERGs can help strengthen your company's culture of equitable opportunity and identify ways to engage and educate female employees when they have questions or are seeking advice from others."

Overall account balances declined by 17% driven by stock and bond market declines. Nearly three-quarters of respondents have less than $50,000 saved in their 401(k), the report found. Further, participation dropped slightly by the end of 2022 from 58% in 2021 to 56%. Gen X has the highest 401(k) participation rate at 65%, followed by 57% of baby boomers and 55% of millennials. Gen X males participate at the highest rate, with 70% contributing to their 401(k).

When 401(k) plans include an auto-enrollment feature, most employees (85%) participate, compared to just 36% participation without this feature. Only 2.2% of employees opt out of auto-enrollment features, the report said.

Twenty-six percent of participants increased their contribution rate while 8% decreased their savings rate last year. The average contribution dropped from 6.6% in 2021 to 6.4% last year, with older participants and men contributing more than women and younger workers. Only 9% of participants, including more men than women, maxed out their contributions. Older participants and men in general continue to contribute more than women and younger workers.

Loans taken from 401(k)s have held steady, while hardship distributions are up, the report revealed. Fifteen percent of active participants had a loan outstanding in 2022, consistent with the prior year. Gen X men and women take out more loans and carry larger balances than other generations, and the average 401(k) loan balance was down slightly to $8,143. Meanwhile, the percentage of participants who took a hardship distribution in 2022 increased to 1.6%.

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Financial education resources are top of mind. Employees are eager for education, with top interests including retirement (70%) and budgeting (23%). Participants would prefer to learn by attending a webinar (69%), followed by a short video (36%) and visiting a website for information (31%).

"Our 2023 Financial Life Benefits Impact Report revealed that 401(k) participation rates, contribution rates and account balances all declined in 2022," said Sabbia. "But the good news is that employers have an opportunity to change the trend. Employers can play a critical role in bettering their employees' financial journeys and path to retirement. Employers need to think holistically by providing the right benefits, resources and education. Smart plan design, such as auto-enrollment and auto-increase, can be crucial keys to retirement success. In addition, employers should help employees build knowledge around benefits and empower employees to use them to the fullest by providing extensive communication and a variety of educational resources."

Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM's Retirement Advisor magazine and LifeHealthPro online channel.