In Greek Mythology, the four winds were minor gods sometimes depicted as winged men or horses. Each of the winds – Boreas, Zephyrus, Notus and Eurus – blew from different directions, bringing the four seasons and sometimes, headwinds.
Like the Greeks in mythological times, women who need to save for retirement today often face their own headwinds. Those winds together or even individually can prevent women from achieving financial wellness, particularly when it comes to long-term financial goals such as planning for retirement.
Employers that sponsor retirement savings plans may help women participants by better understanding the special challenges they face. Education and encouragement are the keys to battling the winds and making progress against them.
Headwind No. 1: The retirement planning gap
Many people, especially women, find it difficult to project how long they can expect to live in retirement. Nearly half of women (43 percent) are unsure of how long their savings will last compared to one third of men, according to the MassMutual Women’s Retirement Risk Study .
The strength of this headwind is one reason why the study finds that women on average expect to run out of retirement income five years too soon. It’s a “gap” that women can close or even avoid by taking steps to plan sooner rather than later, pulling all of the financial levers available to them, and regularly reviewing their goals and their progress in accomplishing them.
Employers can help by working with retirement plan providers and financial advisors to sponsor educational seminars that focus on longevity, creating sustainable income, and the importance of starting to save as soon as possible. Encouraging women to check and adjust frequently, comparing projections of retirement income to expenses, may help them plan accordingly.
As a starting point, MassMutual offers a retirement planning workbook: “Empowering Women for What’s Now … And What’s Next.”
Headwind No. 2: Risk aversion may be holding women back
Women tend to be more concerned about market volatility and mismanaging their investments than men, the study finds. Pre-retirees, according to the study, are more likely to worry than retirees.
While nearly all women say they want their investments to grow during retirement (97 percent), women are less comfortable with investment risk and tend to believe they should become considerably more conservative in retirement than their male counterparts, according to the study. Women who work with a financial advisor (71 percent) are more likely to say their advisor recommended that they invest more aggressively.
Educational sessions may be in order on investing, the power of compound interest, and how best to help protect retirement savings from deep losses just before and just after retirement. The study indicates that the more savers understand investments, the more likely they are to potentially take advantage of opportunities.
Headwind No. 3: Women lack confidence
Overall, the study points to several reasons why women anticipate a more difficult time financially than men when it comes to retirement. Those reasons include being less confident about managing savings and investments, optimizing Social Security, replacing a higher percentage of their pre-retirement income, and taking investment risk.
MassMutual’s study shows that many women are less comfortable with financial issues and money in general, so it’s critical for them to have access to more education, professional financial advice, planning tools and other resources to meet these challenges head on.
Headwind No. 4: Women may be better investors than they think
While women may be less familiar than men with investment options and less proactive in financial management, there is evidence in the data that women are open to education and advice. Three in five women (61 percent) prefer to delegate financial decisions, less than half of men (45 percent) share that preference, MassMutual’s study finds.
Given their preference to delegate financial decisions, it’s unsurprising that women are more likely than men to be currently working with a professional financial advisor (72 percent vs. 57 percent). Helping provide access to professional financial guidance may help women turn headwinds into tailwinds when it comes to managing their money.
The four winds often blow hard, no matter the season, making it difficult for many retirement savers to make progress against long-term goals. The secret to defeating headwinds is to arm retirement savers – especially women – with the knowledge, tools and resources they need to make the best decisions over the long term. Doing so may help turn the coldest winter gale into a warm summer breeze and help make retirement the season of contentment.
Una Morabito is Senior Vice President, Workplace Relationship Management, for Massachusetts Mutual Life Insurance Co. (MassMutual).