How financial wellness and legal plans partner to help women
I’m proud to admit that I’m a passionate (and often unapologetic) advocate when it comes to providing people with affordable access to justice. And…
When it comes to employees’ finances, it’s important to note that women in today’s workforce face unique, as well as disproportionate challenges.
Here are some of the main obstacles blocking their path toward financial freedom – and solutions you can offer your clients to help them get there.
Added financial pressure – and less security
The numbers tell the story: The financial uphill climb women face is real and ongoing. Women in the U.S. still earn notably less than men, averaging just 82 cents per dollar, while pay gaps are even wider for many women of color. Notably, 61% of young women say they face financial anxiety, stress about finding a well-paying job, and are concerned about balancing their future career and personal life. A recent survey showed that nearly 6 in 10 women are living paycheck to paycheck, compared to 41% of men. And almost half of the respondents reported that basic needs like doctor’s visits, necessary medications, mental health care, healthy food, and safe housing have been skipped in the last six months due to cost.
Juggling households, careers and caregiving duties
What’s driving this added financial stress and insecurity? For starters, many women are not only tasked with managing their own financial obligations, but often must deal with the financial challenges or caregiving needs of others, like a parent who needs a medical procedure or a care facility.
According to a Deloitte Women @ Work 2023 Study, nearly half of the women who work full time have primary responsibility for domestic tasks such as household cleaning or caring for dependents. Only around 10% say these responsibilities fall to their partner. Additionally, women of color are more likely to be caregivers.
Additionally, since women are more likely to reduce their work hours or take a break from their careers to care for a child or family member, that time away from work generally means less income and less ability to save. Studies have identified a “motherhood penalty,” where women who indicated they were a parent or primary caregiver saw the pay gap widen to 75 cents for every dollar earned by a male parent.
Women are living longer – but saving less for retirement
Women live longer than men after the traditional retirement age of 65 – 18% longer, on average – which means a greater need to have a prolonged income stream in retirement. Yet women save less than men do to support themselves in retirement, Census Bureau data shows. For example, the average 401(k) account balance for men is about 50% greater than for women ($89,000 vs. $59,000).
Less capacity to handle sudden expenses – and legal issues
As these factors converge to inhibit women’s capacity to earn and save more, it also means less wiggle room when an unexpected expense comes up. In fact, a Federal Reserve System survey showed that women were less likely (at 52 percent) than men (at 56 percent) to be able to cover three months of expenses with emergency savings. Plus, many financial matters can escalate and morph into legal issues, which means added expenses, time, and stress incurred to resolve them.
Another area where women may struggle is handling the expense of a divorce and related custody matters. Shellye Carpenter, Director of Partner Relations at BALANCE, a not-for-profit financial counseling and education service and an ARAG partner, notes, “It can be challenging for women to find good, affordable legal assistance and even more challenging to find ways to pay for it all. This is where legal plans partner well with solid financial counseling organizations. The legal plan gives them access to quality legal counsel without breaking the bank while counseling provides a roadmap to help get them back on financial track.”
She adds, “Through a financial wellness program, we can use our expertise and tools to help women restructure their household budget to reflect changes in income for a new single mom, review a credit report with her and provide strategies for repayment, or, if the situation is dire, point women in the right direction with respect to bankruptcy counseling, if necessary.”
Provide the right resources to help women overcome financial obstacles
To help women better manage – or regain control of – their finances, Carpenter suggests that employers provide access to financial wellness resources. These can include access to coaching and on-demand resources like webinars, etc. as part of their employee benefit package, either directly or through an employee assistance program (EAP). She adds, “It’s important to know exactly what the organization’s benefits package is offering to make sure all the needs of the employee population – including the unique financial needs of women – are being served.”
For example, Carpenter recommends offering workshops where women can lean on and lift up the experiences of other women through interactive programs. “The value of these is that they give women the opportunity to learn from each other and ask questions in a very non-judgmental environment,” she says.
Carpenter adds that benefits could also include free or affordable access to retirement planning professionals that provide women that one-on-one education and perspective they need to secure their futures.
Through her experiences with employees who’ve contacted BALANCE for help, Carpenter feels the key for employers is to offer a comprehensive financial wellness and counseling program that takes a holistic approach to financial coaching. She notes, “This is important because it’s hard for women to not consider the needs of her family, even if she’s planning something as singular as her own retirement. Our counseling team looks at the entirety of a caller’s situation and tailors solutions that fit a woman’s desire to look after her family as she plans for her own future.”
Ann Cosimano has served as general counsel at ARAG since 2000 – and starting her career as an attorney in the non-profit world has fostered a deep respect for members experiencing legal matters.