Advisors should be educating the female workforce on the disparity and what they can do to bolster their retirement investment portfolio
According to a report from the National Institute on
Retirement Security, it’s tough being a woman facing retirement. Women aged 65
or older face an income that’s on average 25% lower than that of men of the
same age group. By age 80, those same women will see a 44% gap in their income
over the income of men that age.
Part of the problem is that women earn less than men. The
National Committee on Pay Equity has tracked the disparity each year since
1996. This year, women will be working until April 10th in order to
earn the same amount as their male counterparts did in 2017.
Also, women live longer. The US Department of Health and
Human Services statistics have women living an average of 81.2 years compared
to men living an average of 76.4 years. Women simply need more money into
With that in mind, retirement plan advisors can help the
female plan participant augment her savings strategy and close that gap. Advisors
should be educating the female workforce on the disparity and what they can do
to bolster their retirement investment portfolio.
Strategies advisors can use include:
Maxing out the employer
contribution. Contributing at any amount less than what the employer will
match means your participant is leaving money on the table. Help female
participants devise a strategy that allows them to maximize their contributions
while still meeting their other financial obligations.
Recognizing the issue, government-sponsored plans have built in catch-up
mechanisms that allow women to increase their contributions to tax-deferred
savings plans. Help your female plan participants see what the impact of those
increased contributions are over the long term.
Debt reduction or
elimination. One common barrier to retirement saving is holding on to debt.
Advisors can help their plan participants come up with strategies for reducing
or eliminating those debts. That money once allocated to paying off debt can
now be redirected into retirement accounts.
Do the math. Not
only the amount your female plan participant needs, but also the rate of return
should be determined so that she is confident the money she’s investing is
going to grow at the rate she requires.
Increase by one
percent each year. Most employees receive a cost-of-living increase each
year. By convincing participants, particularly female participants, to allocate
one percent of that increase each year, you can help them find the additional investment
capital without an impact to their wallet.
Budget now, retire
more securely later. Helping female participants budget while they’re still
working has a twofold result – participants learn to live within a budget
(particularly useful skills during retirement), and they are able to build up
their savings and retirement accounts.
Women needing to close the gap in their retirement savings accounts don’t have to fall so far behind their male counterparts. Advisors can help women ready their accounts – and their habits – now so that retirement can become an event to look forward to.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.get xpress proposal