Workplace Culture

Women and Retirement: Making Up the Difference

By Patty Kujawa

Jun. 19, 2016

Christi Koke has been putting in 40 to 60 hour weeks in the retail industry for more than 25 years. She works at the designer handbag and clothing store Coach in Leesburg, Virginia, and she’s taking out just enough from her paycheck to get the employer match in her 401(k) plan. She also has an individual retirement account on the side, but is constantly wondering whether she is on track to retire in 12 years at age 62, which is her goal.

“I never think I am doing well enough,” Koke said. “I think about what I live on for a year, and I see that I’m going to need a lot of money” in retirement.

Koke, who is 50, said she hasn’t used any of the online tools available through her 401(k) plan to calculate how much she will need in retirement or checked to make sure her investments are suitable for a woman her age. Her father is a financial adviser and has helped her with her money and budgeting.

She thinks things are going well though. She is single, so she went in with a family member to buy her home. They share living expenses, which helps keep her daily budget in check. With nearly $500,000 in her retirement funds, Koke thinks she has a good handle on her finances but still questions whether she is doing enough.

“I worry about that one thing that might come up and ruin everything,” Koke said.

Koke’s story is not unusual. Only 12 percent of women are very confident that they will retire comfortably, according to the Transamerica Center for Retirement Studies’ 16th Annual Survey of American Workers. Plus, the same study shows that women are less likely than men to have access to a 401(k) plan, participate in a plan if it is offered and contribute to one.

Combine this with earning less money, working part time, hopping in and out of the workforce to take care of family members, and expecting to live longer, and a bleak financial picture for women starts to emerge.

Transamerica’s data found that women’s median household retirement savings is woefully behind their male counterparts: $41,000 vs. $88,000.

“Women have so many circumstances that they face,” said Catherine Collinson, president of the Transamerica Center for Retirement Studies. “Women need to be more aware of the risks out there and what they can do about them” to become better savers for retirement.

Today, the reality and the perception of women being less prepared for retirement is hitting a crossroad, and the industry and plan sponsors are waking up and looking at why women do not engage when it comes to retirement planning.

“Women are not being serviced well by the financial industry today,” said Carla Dearing, CEO for Sum180, a web-based advisory firm. “When a huge chunk of users choose not to use a product, it’s the industry’s fault.”

Facing Retirement by Generation

Generation Z

Annelise Boland is a world traveler. At just 20 years old, this Carthage College junior spent the spring 2016 semester living and learning in Nice, France, as part of the Kenosha, Wisconsin-based school’s study abroad program. For five months, she has spoken almost entirely in French. The cultural knowledge she has amassed is incalculable, and the life skills she has learned are invaluable — especially when it comes to finances.

Boland said she was hesitant to make the journey at first. She was not sure if she would be comfortable being that far from family and friends for so long. Almost as soon as she realized that the opportunity outweighed her fears, cost became an issue.

“Study abroad students are required to attend a series of meetings to prepare for the trip the semester before they go abroad,” Boland said. “After safety, the next biggest topic was spending.”

And Carthage wasn’t just concerned with the immediate need to stick to a budget to avoid pestering parents for extra spending money. They thought long term.

“We were given rough estimates of what other students had spent during previous semesters, which was helpful for planning, but they talked a lot about long-term saving, too,” Boland said. “It was kind of an opportunity to get us thinking about value and not just blowing through whatever money we have on a whim.”

For a lot of students who are just beginning their careers and undoubtedly aren’t giving much thought to retirement, preparing for a trip abroad is the first venture into long-term savings. Boland admitted that she had never really thought about setting aside money each month until she was encouraged to do so by Carthage.

“I think a lot about wanting to get a good job after graduation so I can pay off loans and find a place to live, but this experience was different,” Boland said. “It took a lot of discipline at first, but I think it was really good practice for the future.”



Millennials aren’t good at saving. Some would say this is a stereotype perpetuated by a desire for work-life balance and their propensity to job hop. According to a survey of 2,585 people ages 18 to 35 conducted by finance site, it’s rooted in the truth as well.

According to their findings, more than 50 percent of those surveyed currently had less than $1,000 in savings. And women accounted for 57 percent of that group.

But just because the majority aren’t saving doesn’t mean that many women aren’t thinking ahead and planning for a future rainy day.

Chelsea Hollenkamp, an associate at MidCap Financial, a middle-market finance firm in Chicago, grew up learning the importance of spending wisely and always saving.

“My dad works in the finance and wealth management field, so from a young age I was aware of how much things cost and that if I wanted something, I had to save,” the 25-year-old said.

That early training led her to a career in finance. Hollenkamp majored in economics with a minor in corporate strategy at Vanderbilt University. When she was going on job interviews during the fall of her senior year, retirement savings was one of her top questions to potential employers.

“I remember practicing for interviews with my dad over the phone and being worried about what questions I should ask at the end of the interview,” Hollenkamp said. “My dad always said to ask about 401(k) programs and how much an employer would match.”

Hollenkamp accepted a job at JPMorgan Chase & Co., and as soon as the option became available, she began paying into a 401(k) account. Having that account even played a role in her decision to leave the company for another opportunity.

“Last year, I had a lot of friends who were making the move into financial startups and investment firms,” Hollenkamp said. “And even though they were making great money and loved the benefits, I held off really looking until after the new year because I wanted to make sure JPMorgan would match my 401(k). I’m going to need that money in the long run, so it was worth the wait.”


Generation X

Angela Adolf uses her organizational planning expertise to shape her approach to long-term retirement saving.

As the daughter of two Iowa schoolteachers, Angela Adolf grew up in a frugal household. Her parents worked hard, rarely vacationed, and saved.

“My parents are very practical people,” said Adolf, 40. “My sister and I understood from a young age that we had to work for what we wanted.”

Adolf never really worked in a traditional sense. She has served as the president of the school board for the Homer Community Consolidated School District 33C in Homer Glen, Illinois, and has acted as the executive director and producer of the DuPage (Illinois) Conservatory of Fine Arts. While each role is voluntary and therefore does not include the option of a 401(k) or other financial planning advice, each has required her to be aware of budget and planned expenses.

“As school board president, I had to help assess performance and help in the hiring and firing decisions,” Adolf said. “I also helped balance the budget. Long-term planning was basically part of my job description.”

Adolf volunteered her time to help these organizations run because she knew she was up to the task. That experience has helped shape her approach to long-term retirement savings.

As the mother of two boys, Ryan, 13, and William, 10, Adolf and her husband, Joe, have been planning for college tuition for her sons and retirement for her and her husband since they started their family. He has a steady job at Colorado Technical University, which affords him a 401(k) match option. And she has recently completed her teaching certificate and has been student teaching in Orland Park, Illinois. Adolf hopes to find a job as a middle school teacher. When she begins earning her salary, a portion will undoubtedly go to savings.

“My boys are getting bigger, so I have the opportunity to go out and work at something I’m good at and be paid for it,” Adolf said. “Two incomes doesn’t mean wasteful spending. It still means investing in savings.”


Baby boomer

Laura Ward has always been a hard worker. She took her first job at age 16 at an Egg Store near her Garfield Ridge neighborhood on the South Side of Chicago so she could save up to buy a 1967 Pontiac GTO.

“I wasn’t really focused on doing well in school back then,” the 54-year-old said. “But I didn’t mind working if it meant getting paid. There were things I wanted.”

Unfortunately, the immediate satisfaction of making a purchase took precedence over the discipline needed to save. Ward held down a part-time job until she graduated high school. Then, instead of pursuing college as her parents wanted, she took a full-time job at the Egg Store.

“I continued to live with my parents, and they made me pay rent,” Ward said. “So I set aside $200 a month to give to my father, and the rest went to hanging out with friends.”

Long-term savings didn’t cross her mind until she met her husband, Ron Ward. They were just 20 years old when they got engaged.

“That’s when I started thinking savings,” Ward said. “I wanted a wedding. I wanted a house. I knew children would be expensive. I was thinking long-term, but not retirement long-term.”

Thankfully, Ward’s husband, a carpenter in a Chicago union, was already setting aside a portion of each paycheck for retirement.

“I let ‘Big Ron’ take care of that,” Ward said. “I continued to work at the Egg Store and at the garden center during the summers, but my money always went to the immediate. I bought groceries and paid for hockey and Irish dance for my kids. I counted on him for the savings.”

—Sarah Sipek

What’s the Problem?

Aside from all the previously mentioned factors, women of all ages sabotage themselves by not talking about finances, said Meghan Murphy, a director at Fidelity Investments.

“Women are more likely to talk about their sex life than finances, and that’s not OK,” Murphy said. “It’s kind of taboo to talk about money.”

Fidelity’s 2015 “Money FIT Women” — FIT being short for “Focus, Invest and Time” — study showed that while 77 percent of women are happy to talk about medical issues with a doctor, less than half would want to talk to a financial adviser. Plus, 4 in 5 women say they don’t want to talk about money with people they are close to. Millennials are the largest offenders at 86 percent.

But there is another problem: Only 35 percent of women use financial advisory services offered at their workplaces.

So why don’t women engage? Fidelity found that more than half of the women they talked with said money matters were too personal. More than a third said they didn’t even want to give family members this information.

That boils down to confidence, experts say.

Financial Snapshots by Generation

Getting the magical 15 percent of salary into a 401(k) account is a struggle for many women no matter what their age is, experts say.

Transamerica crunched numbers exclusively for Workforce and found that, last year, millennial women reported a median $19,000 saved for retirement vs. $31,000 for men in the same age group; Generation X women held $37,000 in their retirement accounts compared with their male counterparts who had $73,000; and baby boomer women show a median $73,000 in their accounts while same-aged men had more than twice that amount at $180,000.

In its survey, “The Real Deal,” HR consultancy Aon Hewitt graphed out how much workers in general need to save by generation and by income. Aon Hewitt says that workers need to have saved about 11 times their final pay at retirement to have enough to maintain their lifestyle. More than half of workers at large companies are either below or significantly below what they need, Aon Hewitt reported.

Of all the generations, Gen X women keep her up at night, Transamerica’s Collinson said. While they have the highest 401(k) participation rate of all working women at 80 percent, they are only contributing 7 percent of pay compared with the 8 percent Gen X men are putting into their accounts. That might be because money could be going to other areas like college savings, health care or other household budget needs.

“Gen Xers are more likely to be taking care of everyone else’s needs when they should be focused on this,” Collinson said. “In many ways, Gen Xers are like ostriches sticking their heads in the sands.”

Younger women are financially strapped with paying back college loans and battling credit card debt. They are seriously lagging behind their male colleagues’ participation and contribution levels; only 68 percent of millennial women participate in their plans compared with 80 percent of millennial men; these women contribute only 6 percent of pay compared with 10 percent for these men.

Collinson said this is because more women work part time in this age group than men. Part-timers, she added, are less likely to have access to a retirement plan at work.

“While the median household income is similar between millennial women and men, millennial women are more likely to cite paying off debt and just getting by as their greatest financial priority right now compared to men” at 46 percent vs. 38 percent, Collinson said.

Female baby boomers also lag behind their male counterparts. Only 79 percent participate in their plans compared with 85 percent of men. Both genders put 8 percent of their paychecks into their retirement accounts.

The difference here is pretty much the same as the younger group — more women work part time. The real concern, Collinson added, is baby boomer women’s total household retirement savings: Those women have a median of $73,000 in savings compared with $180,000 for men.

There Is Hope

Investment management company Vanguard Group looked at its databases and found encouraging information: More women are saving and investing for retirement, and while their account balances might be lower than men, plan design features like automatic enrollment and instant annual bumps in contributions are helping to close that gap.

Overall, men’s account balances were 50 percent higher than women’s, mostly because men earn more money on average. Vanguard found that when it looked at when men and women earned equal pay, women actually saved more and had higher account balances.

Automatic features are helping lower-wage women the most when it comes to participation and saving, according to Vanguard.

“There are two things that are important for everyone: You have to save enough and invest appropriately, and auto-features help people do this,” said Jean Young, senior research analyst at Vanguard. “Everyone’s success in 401(k) plans hinges on design.”

Is There a Solution?

Because the chances of women succeeding in the retirement savings game on their own are pretty low, service providers are coming in full-force with seminars, online tools and other ideas specifically tailored for women to help demystify the investment world and make it easier to understand.

The focus of many campaigns is to help women see that financial planning is possible, and that saving and investing is not just for highly paid workers.

Dearing’s Sum180 is an online financial planning retail service currently targeting women ages 45 to 65. The company launched in November 2015, and gives users three goals to accomplish after they input their financial information and write out what they hope to achieve.

“The language that is being used today is not even beginning to talk the way women are thinking,” Dearing said. “Finances are not this big, tangly, snarly thing you can’t understand. We are telling women you can tackle this, you just can’t do it in one big lump.”

Human resources managers at Blue Cross and Blue Shield of Florida Inc. noticed that participants were not taking full advantage of the company’s 401(k) plan. According to Brightscope Inc., a 401(k) financial information company, the health insurance group — better known as Florida Blue — had great participation, but contribution levels were lacking. The 7,600 participants had an average $81,000 account balance, which Brighscope ranks as average.

Because about 70 percent of the health insurance company’s workforce is composed of women, Florida Blue decided to partner with its provider, Fidelity, to sponsor a series of workshops called Women and Investing.

Nearly 700 people attended the events, which ran from August until October of last year. Florida Blue reported 80 percent of attendees went to all four programs, which spanned issues from getting organized to building a financial blueprint to retirement planning. Webinars were also offered for workers who were unable to attend.

As a result, 50 percent of the attendees increased their 401(k) savings, 57 percent reviewed their investment lineup, 41 percent prepared a budget, and the same percentage said they planned to contact a Fidelity adviser to build a financial plan, according to Florida Blue.

“There is a significant appetite for more,” said Melissa Fiscor, the learning and development manager for Florida Blue. “A number of women came up to us asking what was next. It was incredibly encouraging.”

Fidelity’s financial programs have been good for women because they give a starting point, Murphy said. Fidelity data show that 40 percent of millennial women don’t know how to get started saving for retirement compared with 19 percent of men in that age bracket.

“Confidence is definitely climbing, and a lot of that is due to proactive steps that employers are taking,” Murphy said.

Patty Kujawa is a writer based in Milwaukee. To comment, email Follow Workforce on Twitter at @workforcenews.

Patty Kujawa is a freelance writer based in Milwaukee.

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