RETIREMENT SECURITY for WOMEN AMID COVID-19
Below I have provided details of the key findings of a June 2020 survey completed by the Transamerica Center for Retirement Studies Retirement Security for Women Amid COVID-19. The survey examines the retirement outlook of women compared with men. Many workers, especially women, are at risk of not achieving a financially secure retirement — an issue of major concern before the pandemic. Now, the negative economic effects of the pandemic are further threatening retirement savings and security. The financial vulnerabilities among all workers are increasingly evident.
“I don’t know what the future holds for me and I don’t have enough saving to last very long” - 56-year-old Female
“I am self-employed and can’t work” - 48-year-old Female
“I am more determined” - 33-year-old Female
“I have been borrowing against my retirement” - 46-year-old Female
“I am self-employed and will be working until they put the nail in my coffin” - 56-year-old Female
“Because I am so young, I will be able to bounce back from this” - 25-year-old Female
The survey findings illustrate the vulnerabilities among women:
- Retirement Confidence Is Changing. One in four women (25 percent) say their confidence in their ability to retire comfortably has declined in light of the coronavirus pandemic, compared with 21 percent of men. Only about one in five women are very confident about retirement amid the COVID-19 pandemic, and only 19 percent of women are “very” confident that they will be able to fully retire with a lifestyle they consider comfortable, which is significantly lower than the 28 percent of men who are “very” confident. Twelve percent of women and eight percent of men are not at all confident they will be able to retire with a lifestyle they consider comfortable.
- Women Face Competing Financial Priorities. Amid the COVID-19 recession paying off some form of debt is the most often cited financial priority for women and men; however, women (59 percent) are somewhat more likely than men (53 percent) to cite this. Women are also somewhat more likely to indicate they are "just getting by to cover basic living expenses" (33 percent women, 28 percent men). Only four in ten women cite saving for retirement as a financial priority, compared to 51 percent of men. Women and men are equally as likely to cite "building emergency savings" (both 39 percent).
- One in Five Women Are Just Getting By. Women (20 percent) are significantly more likely than men (12 percent) to cite just getting by to cover basic living expenses as their greatest financial priority right now. Women are somewhat more likely than men to cite paying off credit card debt as their greatest financial priority (14 percent women, 11 percent men). Women (13 percent) are significantly less likely than men (20 percent) to cite saving for retirement as their greatest financial priority.
- Sources of Funds If Finances Are Negatively Impacted. When asked what sources of funds they have used or would use if their finances have been or would be negatively impacted by the coronavirus pandemic, both women and men most frequently cite reliance on savings. However, women (49 percent) are significantly less likely to cite savings than men (62 percent). Approximately three in 10 expect to rely on credit cards (27 percent women, 30 percent men). About one in four expect to rely on unemployment benefits (26 percent women, 25 percent men). Women (26 percent) are somewhat more likely than men (23 percent) to rely on the CARES Act stimulus money.
- Six in 10 Women Are Saving for Retirement. Sixty-one percent of women are currently saving for retirement through their current/former employer’s retirement plan and/or outside the workplace, which is significantly less than men (78 percent). Retirement savings in their current employer’s 401(k), 403(b), or similar plan is the most frequently cited avenue for saving among women (39 percent) and men (55 percent). Of concern, almost four in 10 women (39 percent) are not saving for retirement, which is significantly more than the proportion of men who are not saving for retirement (22 percent).
- Fewer Women Are Dipping into Retirement Savings. As a result of the pandemic, significantly fewer women are dipping into and/or plan to dip into their retirement savings than men. Sixteen percent of women have already and/or plan to take a loan and/or withdrawal from their 401(k), 403(b), or similar plan, compared with 28 percent of men. Of note, nearly one in four women (24 percent) cite having no savings in a qualified retirement account, which is significantly more than the 12 percent of men who cite not having retirement savings.
- Familiarity with Cares Act Retirement Provisions. Signed into law on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is the largest stimulus package in U.S. history with provisions spanning healthcare, small businesses, student loans, and retirement plans. Women (39 percent) are significantly less likely than men (57 percent) to be familiar with the Act’s provisions related to qualified retirement accounts.
- Almost Four in 10 Women Savers Use a Financial Advisor. Thirty-eight percent of women who are saving for retirement use a professional financial advisor to help them manage their retirement savings and investments. Men who are saving for retirement are significantly more likely to use a professional financial advisor (50 percent).
- Frequency (or Infrequency) of Conversations About Retirement. Retirement is a family matter that calls for important conversations, particularly during difficult times. Amid the pandemic, women (13 percent) are significantly less likely than men (28 percent) to frequently discuss saving, investing, and planning for retirement with family and close friends. Conversely, women are significantly more likely to never discuss it (28 percent women, 17 percent men).
10. Women Can Take More Steps to Continue Working Past 65. Women and men must be healthy enough and have access to employment opportunities in order to fulfill their aspirations and expectations of working past age 65. However, when asked what steps they are taking to ensure they can continue working in retirement if needed, relatively few are taking adequate action. During the pandemic, approximately half said they are staying healthy so they can continue working (49 percent women, 51 percent men). Less than four in 10 women are focused on performing well at their current job and keeping their job skills up to date (36 percent both). Eighteen percent of women are networking and meeting new people.
11. Women Can Do More to Safeguard Their Long-Term Health. Given the potential implications on long-term health, women and men can engage in more health-related activities on a consistent basis. Amid the coronavirus pandemic, eating healthfully (57 percent), getting plenty of rest (57 percent), maintaining a positive outlook on life (54 percent), and exercising regularly (50 percent), are the only activities that half or more of women are doing. Men (60 percent) are significantly more likely to be exercising regularly than women (50 percent). More than four in 10 women and men indicate they are avoiding harmful substances (45 percent and 43 percent, respectively).
12. Women Are Happy but Some Face Challenges. More than eight in 10 women report having close relationships with family and/or friends (87 percent), being generally happy (86 percent), and enjoying life (82 percent) even amid the pandemic. Women are less likely than men to be confident in their ability to manage their finances (women 82 percent, men 89 percent), have a strong sense of purpose in life (79 percent women, 84 percent men), and have an active social life (54 percent women, 62 percent men). However, a minority of women face challenges – 45 percent indicate they often feel anxious and depressed, 40 percent are having trouble making ends meet, and 32 percent indicate they are isolated and lonely.
Women have historically been at greater risk of not achieving a financially secure retirement than men. The pandemic and economic downturn have exacerbated women’s financial vulnerabilities. From a societal perspective, it is imperative that we recognize these issues and strengthen our retirement system to bridge inequalities.
Recommendations for Women to Take Control of Their Retirement
Women already faced greater retirement-related risks than men– and now, they are even more vulnerable. Although short-term priorities may need to take precedence, it is important to keep the future and retirement in mind. These steps can help both women and men improve their retirement outlook:
- Assess your current financial situation and create a budget. If you are at risk of missing any rent or debt-related payments due to COVID-19, contact the lender or credit card company to learn of alternative options.
- Develop a retirement strategy and write it down. Envision your future and use an online calculator to estimate your long-term savings needs. Formulate a goal for how much you need to save – and hold yourself accountable for saving.
- Avoid taking loans and early withdrawals from retirement accounts, which can severely inhibit their long-term growth. Before tapping into retirement savings explore all possible alternatives to determine the best option.
- If faced with parenting or caregiving responsibilities, carefully consider any changes to your work. To help mitigate the impact on your long-term financial security, explore options such as shifting to part-time work.
- Maintain your ability to continue working as long as you desire. Keep your job skills up to date and learn new ones. Many classes are available to learn the latest technologies and careers. Consider joining networking groups.
- Become personally involved in your family finances including daily budgeting and long-term planning. Discuss retirement planning with family and close friends.
- Get educated about retirement investing and strategies for drawing down savings in retirement. Learn about types of retirement accounts, asset allocation, and dollar-cost averaging. Become knowledgeable about retirement income, including the best time to start receiving Social Security.
- Have a backup plan in the event of unforeseen circumstances such as separation, divorce, loss of a partner, or being unable to work before your planned retirement. Consider emergency savings and insurance products such as death and disability.
- Take good care of yourself and safeguard your health. Consider health implications when making lifestyle decisions.
- Beware of scams. Be hypervigilant about suspicious text messages, emails, or calls, which are on the rise due to COVID-19.
HOW CAN BOERUM HILL FINANCIAL ADVISORS HELP?
One-third of the nation’s investors that work with a financial advisor said their professional was nowhere to be found during the pandemic, according to a new study by J.D. Power. At Boerum Hill Financial Advisors we not only were in contact with all our clients we were proactive in tactical investment moves and assisting clients in accessing the funding provided by the CARES Act.
Financial planning is more about a relationship than financial jargon and numbers. In every financial plan, there are goals, priorities, and often not enough money for everything. One has to make adaptive moves in the short -term and keep the long-term in focus, and today in times of Covid-19 there is no difference.
At Boerum Hill financial Advisors we aim to fully understand your financial situation and recommend moves that build on the outcomes of previous decisions as we work our way to your measure of financial peace.
We help women create a solid financial foundation, confidence in their future, and a great Lifestyle… Even if they aren’t in the 1%.
 Transamerica Center for Retirement Studies - Retirement Security for Women Amid COVID-19. 20th Annual Transamerica Retirement Survey of Workers, June 2020 https://transamericacenter.org/docs/default-source/retirement-survey-of-workers/tcrs2020_sr_women-retirement-security-amid-covid.pdf