The last year has illustrated the tremendous impact that women can have when we raise our voices together, support, and learn from one another. What if we marshalled that collective power to bridge the retirement savings gap? Here are four strategies that could help:
1. Plan Through Design
When offered a workplace retirement plan, women participate less and contribute less than men.4 Plan design remains the best approach for correcting this gap. Ongoing adoption of auto programs such as auto-enrollment and auto-escalation are instrumental in levelling the playing field. Equally as important is the Qualified Default Investment Alternative (QDIA) that plan participants are enrolled in—making sure the risk level is appropriate for the participant’s goals and target retirement date. Consider setting an aggressive starting deferral rate and raising the cap on the auto-escalation feature. To address increased longevity issues, plan sponsors should consider lifetime income solutions that could aid women at times when they need it most.5
2. Provide Targeted Education and Tools for Millennial Women
One third of millennial women are overextended when it comes to their day-to-day finances.6 This prevents them from starting early and taking advantage of the power of compounding. Financial education around debt and budgeting can help, but should be delivered in a relaxed format that allows for exploration and discovery. Consider “class-like”projects, such as the informal interviews of peers and/or the creation and sharing of podcasts, as ways to deliver education in a very interactive manner.
3. Deploy Targeted Campaigns for Women on Managing Risk
Women tend to invest more conservatively than men, however they do take a long-term approach and are less likely to move their money during turbulent times.7 The behavioral patterns of less accumulation and more exposure to risk can lead to a significant deficit. To modify these broad-based behaviors, create targeted campaigns that demonstrate the impact of different investment decisions and the ways in which women can take charge of their retirement savings. Alongside a foundation of robust default funds, such campaigns can work to provide helpful guide rails for managing investment risk.
4. Incorporate Workplace Financial Education and Peer-to-Peer Learning
A recent study conducted by the Center for Retirement Research at Boston College showed that “workplace financial education increased budgeting and saving, particularly among women.”8 Creating environments that encourage social learning, and communications that tell a story, enhance information retention, particularly for women.9 Therefore, consider a narrative-based financial education format that is supported, but not led by, charts and statistics.
Remember too that scare tactics are ineffective: State Street Global Advisor’s 2017 Gender, Age & Pension Savings (GAPS) research, conducted in London, has shown that women and men both respond better to positive messages. Keep the focus on the benefits of saving, not the risks of not saving enough.10 Consider prioritizing sessions that allow for face-to-face contact, such as lunch-and-learn seminars, over impersonal forums such as online learning modules.
Forging Ahead, Together
In the same way that saving for retirement should be a common experience for men and women, so too should be championing retirement savings equality. Bridging the gender savings gap will take time, but a consistent and collective commitment from policy makers, employers, and employees will make a meaningful difference. By standing up and working together, we can stress the importance of the female retirement savings experience on the broader marketplace. We can also empower women to work towards brighter, more secure futures.