Closing the gender retirement gap: How financial wellness can help. Female employees still face workplace disparity when it comes to retirement planning. Here’s what employers can do to close the gender retirement gap.
Despite progress toward gender equity in the workplace, women still face disparities in retirement preparedness. Men have about 40% more income than women during retirement, according to the OECD, and this trend isn’t limited to the U.S. In fact, nearly every retirement system in the world suffers from the gender retirement gap.
Find out how the gender retirement gap affects your employees, and how financial wellness and other strategies can help level the playing field.
What is the gender retirement gap?
The gender retirement gap refers to the difference in retirement preparedness between men and women — it largely stems from the gender wage gap. According to data from the Center for American Progress, white women earn only 79 cents for each $1 earned by white men. Race furthers this disparity, with Black and brown women earning only 60 cents.Preparing for retirement takes years of saving. So, lower wages earned for an entire career compound into significant differences in retirement preparedness.
How to fix the gender retirement gap:
Employers can help bridge the gender retirement gap; however, doing so requires dedication to employee financial wellness and equity.
While there is no fix-all solution, here’s 3 ways to help join the gender retirement gap:
1. Extend flexibility and family leave to parents of all genders
Women are more associated with time away from the office, especially when it comes to childrearing and the home. Under federal law, employees are only guaranteed 12 workweeks of unpaid family medical leave; however, the loss of income can be detrimental to household finances.
With little federal guidance, employees must depend on their employers’ leave policy.
Parental leave policies typically give women substantially more time off than men, and for most women, their leave is unpaid. Less than 25% of employees receive paid parental leave, according to BLS data, and they typically receive only a percentage of their original paycheck.
When thinking about family leave policies, consider birthing and non-birthing parents and how each may need support. Some companies allow flexible or hybrid work hours, which allow working moms to gradually re-enter the workforce. Others offer family leave of at least six weeks to both, so it’s easier to balance and share home duties.
2. Address career differentials by gender to avoid wage gaps
Since women take on more part-time and unpaid work than men, overtime, this accumulates to women spending less time in the workforce than men. On average, women spend nine fewer years in the workforce, which can hurt women’s pay and promotional opportunities. Less money now means even less during retirement.
Pension plans often require a minimum salary or hours worked for pension payouts. This lessens retirement security for low earners and part-time workers, who are disproportionately women.
Take an honest, critical look at your company and see how you may overlook employees on leave during promotions and bonuses. This can help create equal opportunities for men and women to advance their careers and pay — which may mean reforming employee skills matrices to be more inclusive of those who take leave. Employees should never feel penalized or professionally stagnated for taking time off.
3. Offer employee financial wellness resources and education
Women, on average, are less financially literate than men. When quizzed on personal finance, 21% of women exhibited a relatively low level of financial literacy, compared to 15% of men, according to the TIAA Institute. And when looking at specific financial topics, like investing, the financial literacy gap only widens. Gaps in financial knowledge, such as these, can enlarge the gender retirement gap.
Researchers also think the gap could be explained by women spending more income on the home (e.g., groceries, daycare and cleaning) than they do on retirement or themselves.
Nonetheless, as a solution, experts at Mercer have advocated for financial wellness to help close the gender retirement gap. Through financial wellness programs, women can receive personalized money coaching and other tools to increase their overall financial preparedness.
A major perk of financial wellness programs is that their personalization helps employees of all income brackets and ages. From fresh post-grads, to even those close to retirement, all can benefit from financial wellness resources and guidance — they are to help people achieve their financial goals, while dialing down financial stress.
Need a financial wellness solution? Try Best Money Moves!
Best Money Moves can help your employees address their financial stress and become prepared for retirement, regardless of their stage in life or previous money habits. Best Money Moves offers personalized financial wellness resources and education, focused on solving your employees’ pain points. The program uses artificial intelligence and a human-centered design to measure employee financial stress and then dial it down with personalized solutions. Our budgeting tools, personal finance guidance and more helps employees make more informed financial decisions and reduce their overall stress.
To learn more about Best Money Moves Financial Wellness Platform, let’s schedule a call. Contact us and we’ll reach out to you soon.