Inflation is shaking women’s financial confidence and could be derailing their retirement plans. Nearly two-thirds of women said they are either expecting to retire later than originally planned or don’t believe they will be able to retire at all, compared with 47% of men.
This is a significant increase from 2021, when only one in four women expected to postpone or cancel their retirement due to the COVID-19 pandemic, according to a Nationwide Retirement Institute survey of employer-sponsored retirement plan participants and sponsors.
Not only is Inflation causing women to reduce savings contributions, but it also is compelling them to help others who are struggling due to higher prices, according to the report. Fifteen percent of women who said their retirement plans have changed indicated they have had to financially support a family member or friend due to inflation.
“We fielded this survey in August 2022 as inflation and market volatility continued to weigh on American workers. Still, we were alarmed by the sizable increase from year to year among women who feel they will need to delay their retirements or forgo retiring altogether due to economic pressures,” says Amelia Dunlap, vice president, Retirement Solutions Marketing at Nationwide. “And as many women balance these challenges with family responsibilities at home, 57% said their mental health is being negatively impacted as they feel a secure retirement is becoming less attainable, which has a significant impact on the engagement and productivity of these employees.”
In addition to navigating inflation, women also report that they are struggling to optimize their income in retirement. About half of female respondents said they face challenges around turning their retirement savings into income in retirement, and only 4% of women indicated they are moderately or extremely familiar with retirement planning for decumulation.
However, more women than men are interested in solutions that can help them navigate challenges around inflation and better plan for retirement. More than 90% of female plan participants said they would be at least somewhat likely to roll over a portion or all of their current retirement plan savings into a guaranteed lifetime income investment option if they were able to, compared to 83% of men, the report found.
Dunlap said women can take control of their finances by taking full advantage of their employer’s retirement offerings and resources. Meanwhile, employers should be leaning on their providers of retirement services for the education, resources and solutions to support the retirement planning needs facing their employees, she said.
“It’s also important for participants to understand how their budget, emergency savings, and aspects like student loans may fit into their plan,” said Dunlap. “Saving something for retirement, if possible – even if it’s less than they would like to – is better than stopping altogether.”
She also said all employees facing financial challenges should try to keep hardship withdrawals or contribution reductions to a minimum as these actions may help in the short term but can have long-term negative impacts on retirement security.
Employers need to make sure employees are “talking to your retirement plan administrators to understand resources they may have available” to help them evaluate their options or adjust their investment strategy, Dunlap advises. “Ask if they have or are considering options to help” them convert their savings to lifetime income in retirement.
The start of a new year is an opportune time for plan sponsors to reevaluate their retirement offerings to ensure their participants – particularly women – are able to retire on time with greater confidence, said Dunlap.
“Our data shows that retirement security is a challenge for women, but it’s impacting all participants in a meaningful way,” she said. “Employers and advisors have an opportunity to analyze their plan data and demographics to see if any concerning trends arise – such as disproportionate participation among female employees – and look for ways to offer education or enhanced benefits to drive better engagement and retirement security for their workforce. There could be opportunities to get creative with their plan design, such as offering guaranteed lifetime income solutions, which can help employees feel more secure throughout retirement by offering guaranteed income for life.”
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.