Women who take time to care for family members are repaid by having their retirement savings cut by up to 35% and possibly ending up in an earlier-than-wanted retirement, a new report found.
Many American women are struggling to save adequately for retirement in the face of competing job and family responsibilities, according to the Goldman Sachs Retirement Survey & Insights Report 2022, Navigating the Financial Vortex: Women & Retirement Security.
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Throughout their careers, women are more likely than men to juggle caregiving responsibilities that eat into their retirement savings. These caregiving tasks can also cut careers short, with more than 60% of women respondents reported retiring earlier than planned, with two-thirds of this group doing so for reasons outside of their control.
“Women more often than men are forced to work part time, spend time out of the workforce to care for young children and elderly family members, and juggle other financial priorities during their careers,” said Candice Tse, global head of strategic advisory solutions at Goldman Sachs Asset Management. “This can make their journey to retirement more difficult and incredibly personal.”
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Time out of the workforce to care for family contributes to the financial struggles for many women. For example, two four-year periods out of the workforce (one midcareer and one later) can reduce retirement savings up to 35%, the report said.
“When it comes to retirement, your plan has to be very personalized and customized and take into account what you’re saving for and your competing priorities,” said Mike Moran, senior pension strategist at Goldman Sachs Asset Management.
Given the potential disruptions in careers, as well as the gender wage gap in which men tend to earn more than women, women may need to start saving earlier, save more aggressively and take more investment risk in their portfolios, Moran said.
Also, American women live three years longer than men, on average, and therefore typically need more savings to finance their retirement.
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According to the report, more women (50%) than men (35%) said their retirement savings are behind schedule. Nearly one-quarter of women said they were “very behind schedule,” compared with 14% of men.
When it comes to retirement itself, 50% of men said they retired earlier than planned, but that percentage rose to 61% for women.
Only 15% of women said they retired because their “savings were sufficient to fund my retirement” versus 25% of men. The 66% of women who retired for reasons outside their control most often cited health reasons (29%), to take care of family (16%), or that their job was no longer available (15%).
Despite the complications of managing retirement savings over start-and-stop careers, women don’t turn to outside resources for advice. Although women see financial advice as important, they tend to turn to family members for answers, the report said. After family, women may seek help from their employer’s retirement programs, Moran said.
Financial advisers are not a top resource for women.
“The difference in utilization of these resources highlights the gap in retirement advisers being able to meet women where they are,” said Chris Ceder, senior retirement strategist at Goldman Sachs Asset Management.
The data indicated that the financial industry and employers may need to tweak their offerings to better help women, Moran said.
Employers may need to look at greater paid family leave benefits, more flexible transitions back into the workforce after leaves, and child care services to help women stay working, Moran said.
“Women have unique needs for investing and retirement savings,” Moran said. “How do we help women stay working and stay saving?”