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Goldman Sachs Asset Management Survey Reveals Challenges Women Face Saving for Retirement

Individuals 05.03.2024 6 MIN

Goldman Sachs Asset Management’s Retirement Survey & Insights Report 20231 offers unique insights for employers as they examine how to help support their employees. In this new supplemental report2, our firm’s retirement specialists explore the systemic challenges facing women as they work to save for retirement.

Women’s retirement contributions are, on average, 30% less than men, according to the US Government Accountability Office3.

Asset Management’s report attempts to uncover some of the potential reasons why women’s ability to successfully prepare for retirement is being impacted, including: 

  • gender pay gaps potentially compounded over their time in the workforce;
  • career breaks or periods of part-time work to care for aging family members and/or children;
  • hindered retirement savings creating reduced opportunity for investments to compound over time;
  • longer life expectancy; and
  • identifiable gaps in the Social Security system which fail to account for part-time work and career breaks — with the average check being almost 20% less than men, according to the Social Security Administration’s Annual Statistical Supplement for 2022.


Despite the challenges, there is room for optimism. The survey data shows year-over-year improvement in the retirement outlook of working women respondents, including lower reported stress managing savings, higher reported confidence in their ability to meet their retirement goals and an increase in reported savings relative to the prior year.

Key Takeaways2

  • 43% of women say their retirement savings is behind schedule, significantly more than the 30% of men who say the same.
  • More women want a financial advisor but fewer can access one. Nearly all respondents (95%) believe financial help is important, but they seek different types. Women prefer “do it for me” services while men are more likely to “do it myself” and/or seek periodic advice. However, women are twice as likely as men to report they don’t have sufficient savings to work with a financial advisor — further underscoring the importance of employer-sponsored resources.
  • Caregiving continues to be a key challenge. 40% of working women report leaving their job to care for children or aging parents and 21% moved to part-time work. The income loss from these periods is compounded by the increasing cost of care.
  • Women respondents generally prefer guaranteed income solutions. Some of the risks associated with longer life expectancies that are more difficult to manage may be alleviated by these solutions.
  • Women respondents tend to retire earlier than planned. They’re more likely to do so for reasons other than they planned (i.e., health, taking care of family member, or job loss). Early retirement has important implications, including lower confidence in generating income, which can impact how people spend and live in retirement.


Spotlight on the impact of family care and part-time work

The number of US adults involved in caregiving rose 20% between 2015 and 2020 to 47.9 million4. With retirement saving typically facilitated through workplace retirement plans, career breaks can meaningfully impact accumulated savings. While many factors can affect one’s ability to save for retirement, family care and part-time work play a significant role especially when you consider:

  • part-time work often results in lower wages, fewer benefits and less access to employer-sponsored retirement plans; and
  • career breaks may lead to lower Social Security benefits.

 

Combined with women’s longer life expectancy and potentially earlier-than-expected retirement, this impact on Social Security benefits creates deeper disparities and adds extra pressure on the personal savings of women.

New retirement policy changes taking effect this year will allow long-term part-time workers to access 401(k) plans. The goal is to increase the opportunity for tax deferred savings and, potentially, employer contributions for those in part-time roles.
 

Employer retirement programs are the top source women cite for education and advice to help plan, save and invest for retirement.

How employers can support their employees’ retirement plans

Employer plans are viewed as an important and trusted resource. Both women and men say employer retirement plans are their top source of education and advice.2

  • Women are less likely than men to rely on self-help features common in retirement plans such as articles, tools and calculators.
  • While women prefer hands-on financial help, many do not actively engage with a financial advisor due to insufficient savings.
  • Employer-sponsored plans with institutionally-priced services could help fill the gap for women seeking additional retirement planning services.

To address the unique challenges women can face, a multifaceted approach may be able to help. Addressing retirement benefits for part-time workers, financial education and personalized solutions, for example, can all be important steps. Employer plans play a key role in offering these services. The chart below illustrates the top plan features employees are looking for in their employer plans.

This presentation is for educational purposes only and is not a substitute for individualized professional advice. The information provided should not be construed as personal financial planning, investment, tax or legal advice.