Women’s retirement outlook improving but headwinds persist: GSAM

Advisors need to personalize approach beyond saving more, earlier, and investing.

Women remain at risk of having insufficient retirement income due to additional pressures that they often face compared to men.

A new report from Goldman Sachs Asset Management reveals that women could end up with 24% less in retirement savings than they need, based purely on the cumulative impact of income disparities.

These disparities include decades-long income differences, greater caregiver responsibilities, insufficiency of part-time work, longer life expectancies, and lower benefits from Social Security.

Almost three in ten retired women in the survey reported having less than $50,000 in retirement savings, with only 44% reporting more than $200,000. By contrast, 24% of retired men report less than $50,000, and 54% report more than $200,000. But while 74% of retired women said they live on less than 70% of working income (compared to 65% of men), less than one-third were dissatisfied with this.

The retirement outlook for working women has shown improvement though, GSAM’s survey of more than 5,000 Americans shows. Growing confidence in being able to meet retirement goals and higher levels of savings are key drivers of the stronger outlook.

Marci Green, managing director and head of retirement intermediary distribution at Goldman Sachs Asset Management, says that there is little point in financial advisors telling women to simply start saving earlier and more, and continue to invest. This is unachievable for many women.

“Women need more personalized and multifaceted approaches,” she said. “Enhancing financial education, expanding access to professional advice, and providing broader customized retirement solutions and guaranteed income options are all important steps to help women build confidence in the retirement process. Retirement is a very personal journey and knowing you are on track can provide significant peace of mind.”

A recent survey found that most advisors overestimate their ability to meet the needs of female clients.

CAREGIVERS’ CHALLENGES

One prevalent reason for women’s constrained retirement saving is their oversized share of caregiving roles.

The survey found that women are twice as likely as men to leave the workforce for more than a year for caregiving, and 40% of working women have given up a job to look after children or elderly family members, while 21% have given up full-time work for part-time for this reason.

Women also face the challenge of earlier-than-expected retirement due to caregiving, poor health, or job loss, despite a separate survey showing that even retiring at 65 is considered unachievable for most Americans nearing retirement.

The study also discovered a preference among women respondents for guaranteed income solutions with stable income (57%) and income for life (52%) more important for them than male poll participants (around 45%).

Chris Ceder, senior retirement strategist at GSAM, said that retirement income disparities are widespread and growing.

“Over the last 30-plus years, the top 20% of retirement savers have done well. Meanwhile the bottom 80% have seen limited retirement savings progress,” he said. “That 80% encompasses many demographics, all with unique challenges. We as retirement professionals must do more to help women and men maximize their working earnings, save enough, and invest well as they seek to provide for themselves and their families.”