Far more women than men are delaying retirement as a result of the spike in inflation.
According to a new Nationwide Retirement Institute survey of employer-sponsored retirement plan participants and sponsors, 62% of women are putting off retirement or don’t believe they will ever be able to retire because of inflation, compared to 47% of men. The results show a significant increase from 2021, when only one in four women expected to postpone or abandon their retirement plans due to the Covid-19 pandemic.
The survey also revealed that women are delaying their own retirements to help their loved ones manage rising expenses. In fact, more than one in 10 (15%) of women who say they are postponing or canceling their departure from the workforce say they are doing so because they had or have to financially support a family member or friend as a result of rising prices.
“This highlights the need for our industry to focus more on financial planning than financial products," said Debra Brennan Tagg, president of BFS Advisory Group, which is affiliated with Advisor Group. "A woman in her 50s or 60s contemplating retirement has potentially 30-plus years ahead of her, during which many dynamics in her life will change. The benefit of planning is to model the combination of those dynamics and see where the opportunity is to still achieve her goals.”
Worse still, the financial stress is taking a toll on women’s health and well-being. The report showed more than half (56%) of women feel worried when thinking about their current retirement plan and financial investments, a jump of 22 percentage points from 2021. Moreover, 57% of women who are delaying or cancelling their retirement as a result of inflation say it has negatively impacted their mental health, versus 48% of men.
“Inflation has made saving for retirement particularly difficult for many Americans, but we are seeing the effects among employer-sponsored retirement plan participants greatest felt by women," Amelia Dunlap, vice president of retirement solutions marketing at Nationwide, said in a statement. "In addition to having to reduce their retirement savings, women often have the responsibility of serving as the caretaker for loved ones.”
“Women have long lagged behind men when saving for retirement, and when you compound this fact with a soft investment landscape and rising costs of living, you have a seemingly perfect storm that fosters the perception that women can never stop working," said Hannah Buschbom, a wealth advisor with The AmeriFlex Group. "However, through strategic transitional wealth planning, women — and men — can outline an approach to retirement that provides comfort in reality and perception.”
Navigating inflation isn't the only struggle facing women, according to the survey. Women are also having a difficult time optimizing their income in retirement. The report said that just over half (51%) of female respondents are having a challenging time turning their retirement savings into income in retirement. A scant 4% of women are moderately or extremely familiar with retirement planning for decumulation.
All that said, the survey also said that more women than men are interested in solutions that can help them navigate challenges around inflation and better plan for retirement. Almost all (92%) female plan participants say 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, according to the report.
“It is common knowledge that there continues to be a gender pay gap in our country. Although the gap closing is trending in the right direction, it is moving at a very slow speed," said Christina Nash, founding partner and financial adviser at Knox Grove Financial, which is affiliated with Advisor Group. "According to PayScale, in 2022, ‘the uncontrolled gender pay gap is $0.82 for women to every $1 that men make.’"
"In addition to this statistic, women tend to be financially more conservative and carry multiple family roles and responsibilities," Nash said. "Put it all together and I’m disheartened, but not surprised by this survey result.”
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