Workplace Culture

Women Saving Can Save Women Headed for Retirement

By Patty Kujawa

Jun. 15, 2012

Linda Tampa is a physician with a well-established practice in Milwaukee. She readily admits that medicine is her forte, not money.

She says she lacks financial savvy, and while it doesn’t affect her professionally, Tampa worries she is not properly preparing for life after work.

Tampa, 40, says she puts 4 percent of pay into her 401(k) which allows her to take advantage of the 100 percent match on that amount from her company, Columbia St. Mary’s hospitals. She doesn’t contribute more pretax dollars because she says there is no value in contributing if her company isn’t going to give her more of an incentive—or a higher match—to do it.

The married mother of two children says she hasn’t calculated how much she will need for retirement, but knows that her savings rate isn’t going to be enough.

“When you hear people tell you how much you should be saving, I feel like I am below that number,” Tampa says. “As a physician, I don’t know too much about finances. We have had [financial] seminars, but I’m not motivated to go because it’s inconvenient.”

Statistics from a May study by the ING Retirement Research Institute shows that Tampa is one of many women who are significantly unprepared for retirement. Consultants recommend that workers save 10 to 12 percent of pay annually, but a new study shows that 42 percent of women contribute the lowest amount—1 to 5 percent—of pay to their retirement accounts. By comparison, 34 percent of men contribute in that same range.

Although it’s clear women need to do more, employers can play an important role in helping them become better savers, says Delia deLisser, director of women’s marketing for ING in Windsor, Connecticut. “There isn’t enough education going on in the workforce, and we do see women looking for [financial] education from trusted sources,” deLisser says. “Employers can play a real role in this.”

The ING study, What About Women (and Retirement), looked at the attitudes and activities of 4,050 adults. It showed men had an average of $149,000 in retirement savings, compared with $108,000 for women. More than half, or 56 percent of women, said they didn’t feel financially prepared for retirement. Less than a third of women surveyed have calculated how much money they will need when they retire.

More than three-quarters, or 78 percent, of female survey respondents said they have some sort of barrier to saving, compared with 69 percent of men. That number is the same for divorced or widowed women, and increased by 1 percentage point for single women. Thirty-five percent of all women, 40 percent of divorced and 36 percent of single women said they don’t make enough money.

Plus, women said they have more immediate concerns, such as unexpected financial emergencies (23 percent of women versus 16 percent of men). More than half, or 54 percent, of women, were focused on reducing short-term debt.

The fear of making a mistake with their finances is what stops a lot of women from making decisions with their retirement accounts, says Marina Edwards, a senior consultant with Towers Watson & Co. in Chicago. ING’s survey showed 15 percent of women don’t know what options are available to help them save for retirement.

“We all get the notion that women need to save more–that’s not the challenge,” Edwards says. “It’s more the ‘how do I invest’ information that [plan sponsors] can help with.”

Edwards says data from 401(k) record keepers can help plan sponsors understand who needs help. Record keepers can show data such as account balances, loans, contribution amounts or percentages and group this behavior in many ways, including age, salary levels and gender.

“An employer can segment their 401(k) population and come up with different strategies and education campaigns for different pockets of workers,” Edwards says. “We know that the data is there, and we can use it to find out where the weak spots are.”

Jeanne Thompson, vice president of marketing insights for the nation’s largest record keeper, Boston-based Fidelity Investments, says more plan sponsors are using data to manage their workforce better.

“By doing this, we have shown that there are certain programs that help certain populations,” Thompson says. “For example, automatic enrollment really helps younger workers.”

Some plan sponsors are helping women become better savers, expert say, but the process is slow. Many successful programs start with basic money issues, then move into retirement needs, says Cindy Hounsell, president of the Women’s Institute for a Secure Retirement in Washington.

“So many people don’t even know what a target date fund is,” Hounsell says. “If you don’t know the basics, how are you going to do anything about retirement?”

Patty Kujawa is a writer based in Milwaukee. Comment below or email

Patty Kujawa is a freelance writer based in Milwaukee.

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