With Mother’s Day just around the corner, ING U.S. has released research on women and retirement planning. Judging from the results, perhaps the best present for Mom this year would be a better retirement plan.
Compiled by the ING Retirement Research Institute, the statistics show that women, particularly mothers, are woefully underprepared for retirement. Of those who have funds stashed in or out of employer-sponsored retirement plans, women had an average of $108,000 in total savings. By comparison, men had accumulated $149,000 on average. For women with children at home, the figure dropped to $88,000.
Further, the study found that more women (42 percent) than men (34 percent) contributed just 1 percent to 5 percent of their salary into their employer-sponsored plans. A quarter of women, 25 percent, had a formal investment plan for retirement versus 33 percent of men. More than half‑56 percent‑of women said they felt ill prepared financially for retirement, while 42 percent of men thought the same.
Delia deLisser, director of women’s marketing for ING U.S. Retirement, says this was the first major study undertaken by the company on women and retirement. The firm conducts seminars for its financial partners on how to get women more engaged in the retirement planning process.
She notes that women take retirement preparation and wealth planning very seriously in terms of providing for themselves and their families. “We counsel our advisors to sit and listen and allow women to talk about their situations, what’s important to them as far as their families and caring for them,” deLisser says. “Then they can provide solutions that address those specific needs that women have.”
Yet deLisser notes that mothers face additional challenges to funding a secure retirement. Women still earn, on average, 80 cents to every $1 a man makes. Women also tend to take time away from the workforce to care for children or other family members, which lowers their Social Security benefits and gives them fewer dollars to save.
Many women may not be aware of how these factors affect their retirement, deLisser says.
“Women don’t think about those things and the impact they have on their savings,” she says.
Sharing this information with women and advisors can call attention to the need for women to be more proactive in terms of saving for their own retirement, deLisser adds.
Other findings from the ING study:
- Sixty percent of mothers do not feel prepared for retirement and almost half (46 percent) don’t know how to achieve their retirement goals.
- Just over half of mothers‑53 percent‑have less than $25,000 saved in their employer-sponsored retirement plan.
- Less than two-thirds of mothers (65 percent) receive their employer’s full company match compared to more than three-quarters (76 percent) of fathers.
- Of women in the 50 to 64 age bracket, 54 percent had not calculated how much money they will need to support their current lifestyle in retirement, and only 33 percent had formally mapped out how to reach their retirement goals.
- Of Gen Y women (age 25-34), only 6 percent put most of their extra money toward retirement savings, while more than half (54 percent) use their money for entertainment or vacations.
- Single women were less likely to work with a financial professional (21 percent) than married, divorced or widowed women (31 percent).