A new survey has revealed that women don’t have enough retirement benefits savings. It revealed the major reasons behind the widening gap between men and women retirement savings. The company which conducted the survey suggests that the employers can play a key role in reducing the retirement gap by following some simple measures.
Survey Results Regarding Women Retirement Benefits Savings
The survey was conducted by a benefits consultant firm, Aon Hewitt. It revealed that about 5 out of 6 women are not saving enough towards their retirement benefits. The survey further states that while men and women are participating in various employer-sponsored 401(k) plans at almost the same rate, women savings are less than men. While 74 percent men are not saving enough to meet their retirement needs, 83 percent of women are doing the same.
The reason behind why women are not saving enough for retirement vary from getting low salary scale as compared to men at the beginning of their career to taking a break in service. Women also make more emergency withdrawals and take loans from their 401(k) savings as compared to men. They don’t even make use of 401(k) catch-up provisions. These reasons were highlighted by the Director of Retirement Products and Solutions at Aon Hewitt, Virginia Maguire
It is pertinent to add here that making use of 401(k) catch-up provisions allows employees over 50 years of age to save an additional $6,000 per year in the 401(k). This additional $6,000 is separate from the annual $18,000 limit.
Why Women Withdraw more Money from 401(k)
Data states that women withdraw more money from the 401(k) plans because they often don’t have any emergency savings or because they are dealing with health issues.
Aon Hewitt says that women can have more retirement benefits savings if their employers decide to help them. The company suggested three measures that employers can take to help women close the retirement gap. The first option is to offer tools like financial market education, health care, debt management, budgeting, etc. so that women can manage long-term and day-to-day financial plans. The second measure is to offer professional help with investment to women employees.
The final measure can be to help women to increase the retirement benefits savings rate by adding features like automatic contribution escalation to their plans after getting their approval.