The Finance of Longevity

The Retirement Income Gender Gap

Women lag men in retirement savings, Prudential study finds

October 22, 2018 — NEWARK, N.J.–(BUSINESS WIRE)–Women on average have saved 43 percent less for retirement than men, finds new data from Prudential Financial, Inc. (NYSE: PRU).

Data from Prudential’s 2018 Financial Wellness Census™ finds that women and men on average expect to retire at age 67. But women have saved an average of $115,000 compared with $203,000 for men and nearly half (46 percent) of women said they have no retirement savings.

The findings come at the start of National Retirement Security Week, aimed at educating Americans about the importance of planning for a secure retirement.

Parity… or better

“More needs to be done to help women develop a retirement income strategy to not only put them on a parity with men, but to ensure they are financially secure,” said Kent Sluyter, president of Prudential Annuities.

Among the census’ other findings, less than half of women (48 percent) are confident they’ll have enough saved to last through retirement. Only 38 percent are certain how much monthly income they’ll want to have in retirement and only 31 percent know how much they’ll have to save up to reach their retirement goals.

“Accumulating savings for retirement is important. But finding a way to generate a regular income in retirement is vital to a secure retirement for all, and particularly for women who have been unable to save as much as men,” Sluyter said.

The census found the No. 1 retirement priority for women is ensuring their financial security in the event of outliving a spouse or partner. More than a quarter of women (28 percent) said they plan to rely on their spouse’s money as a significant portion of retirement income.

But the data also shows 66 percent of women don’t work with a financial advisor, either because they believe they can’t afford it or that they don’t have adequate resources to warrant an advisor’s help.

The Household CFO

“Annuities can be a powerful tool to help women create a steady stream of retirement income to supplement other savings,” said Melissa Kivett, senior vice president, chief marketing and customer experience officer for Prudential Individual Solutions Group. “For anyone, getting the right financial advice before buying an annuity or any other financial product is critical. For women especially, who are increasingly bearing more responsibility as primary wage earners and being the ‘CFOs’ of their household, it is even more important to help close the retirement income gap.”

Organizations like the Alliance for Lifetime Income, established by Prudential and 23 other leading financial services companies, are working to promote greater understanding of how annuities can help grow retirement savings.

Sluyter added, “Financial wellness is about being able to meet one’s financial needs as they evolve throughout a lifetime. The retirement planning model is now adopting this holistic approach—ensuring that retirees don’t simply reach their retirement but can maintain financial security throughout it.”

 Excerpts from the 2018 Prudential Financial Wellness Census

Accumulating savings for retirement is important. But finding a way to generate a regular income in retirement is vital to a secure retirement for all, and particularly for women who have been unable to save as much as men

Most Americans see saving for retirement as a top priority
Americans have absorbed the message that their financial security in retirement depends to a large degree on how diligently they save and invest before they get there. Seventy-five percent of Census respondents say having enough savings to last through their retirement years is an important goal. Indeed, it is the most commonly cited goal among all respondents—including younger generations, for whom retirement is often thought to be a distant and unconsidered goal. The second and third most common are ensuring the ability to pay for their future health care needs (cited by 73%), and keeping up with current expenses (72%).

In general, the financial goals people value most are those that give them a choice in how they are able to live. These include how they spend their retirement, and when and where they retire. More than a quarter of Americans have skewed perceptions of their financial health.

Seventeen percent of Americans perceive themselves to be in good financial shape despite having a low level of objective financial health. Another 12% fall on the other side of the spectrum; they are pessimistic about their finances even though they have high levels of financial health objectively. The most common cause of worry about the financial future
for most Americans is the idea they will never be able to retire, and will have to work as long as they are able. The top behavioral driver of this worry is not having saved enough money. Another—and the biggest perceived barrier to financial security—is not making enough money.

American optimism is not dead
A majority of Census respondents are confident they’ll reach their financial goals, even when they are not on track to do so. Out of a list of 22 financial goals, results indicate that a majority of Americans believe they are on track to meet only two of them: being able to stay in their home when they retire, and keeping up with current expenses. Fewer than 50% of respondents consider themselves on track to meet their other goals, although more than 50% believe they will achieve them.
Even among those who are struggling financially, many dream of having a financially secure retirement. Approximately two-thirds of those who are struggling financially, by objective measures, rank “having enough savings to last through my retirement years” as an important financial goal. And a like number include it among their top three goals, suggesting they have not given up on the idea.

 

About Prudential Financial
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with more than $1 trillion of assets under management as of June 30, 2018, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit news.prudential.com.
The Prudential Insurance Company of America, Newark, NJ, and its affiliates. Prudential Annuities is a business of Prudential Financial, Inc.

 

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