Women face a 'harrowing' road to retirement: How employers, advisors can clear roadblocks

Studies often reveal that women are less prepared for retirement financially than men, but a recent survey commissioned by fintech IRALOGIX described women’s road to retirement as “harrowing.” In fact, many respondents to the survey said retirement won’t even be an option for them as financial necessity will compel them to continue working.

Nearly 60% of women surveyed said they don’t know how much money they’ll need in retirement, don’t have a plan to put aside any retirement money, or are struggling to live on their current income so they can’t think about retirement savings. Nearly one-third said they will ‘wing it’ when it comes to future pressures on their retirement savings like supporting aging parents or contributing to a child’s/grandchild’s education.

“Given what we already know about Americans’ retirement readiness, we hypothesized the survey’s results would point to women being largely unprepared for retirement, reflecting the general trends of low savings and diminished confidence that retirement savings will last as long as needed,” said Lowell Smith, IRALOGIX co-founder. “What we weren’t expecting was the gravity of the situation.”

Nearly three-quarters of women surveyed indicated they expect to outlive their retirement savings, with nearly half expecting their savings to be depleted only seven years into retirement. Nearly a third said their savings will last three years at most. Only 7% believe they have sufficient savings to last their entire retirement, while 35% of women said they won’t be able to meet the debts they are accruing during their working years, and more than half of women surveyed said they have no backup plan to deal with this shortfall. Some say they will consider moving in with family members to save on expenses.

The high cost of living was most often cited as the primary challenge women have to saving more money for retirement, with 60% saying they frequently must choose between saving for retirement and paying for essential expenses. Other roadblocks cited include health care costs, lack of access to an employer-sponsored retirement plan and career breaks to care for children or aging family members. About 43% of women said they are unprepared for the impact of financial emergencies, like a job loss or medical expense, could have on their retirement savings, and more than one in five said they have emptied their employer-sponsored retirement account to meet non-retirement expenses.

Related: Closing the 401(k) gender gap? Millennial women are saving more for retirement

More than a quarter (28%) of women say they blame themselves for not having started saving sooner. Asked what advice they’d give to younger women about saving for retirement, respondents said they would recommend saving earlier, setting realistic and achievable retirement savings goals, looking for jobs that offer good retirement benefits, and seeking out experts to help. SECURE 2.0 includes provisions that may help women who delayed saving for retirement. Starting January 1, 2025, individuals ages 60 through 63 years old will be able to make catch-up contributions up to $10,000 annually to a workplace plan, and that amount will be indexed to inflation, said Smith. The catch-up amount for people aged 50 and older in 2023 and 2024 is $7,500.

“It’s incumbent on us in the financial industry to do a better job of reaching women as early as possible in their careers with education and guidance specifically geared to women instead of today’s one-size-fits-all approach,” said Smith, noting customized messaging should also consider other segmentations like age, level of education, race, language barriers and salary ranges. “Employers need to ensure their employees have access to a corporate retirement plan so that future generations of women won’t have to trudge this same difficult, disappointing path.”