Employers and benefit providers face increasing pressure to give employees the tools and resources to get their financial lives on track. However, despite recent interest and effort from industry leaders, data reveals that employers generally have a long way to go to ensure their employees’ financial wellness, especially women. Corporate Insight’s newest study—A Roadmap of the Financial Wellness Ecosystem—reveals that women continue to be less confident, less prepared and less engaged with financial wellness topics and programs than their male counterparts.
According to our survey data, 6% more men than women report using their employer’s defined contribution plan. Not only do men use DC plans more often, they also report significantly higher contribution rates; 61% of women contribute 6% or less of each paycheck, compared to just 45% of men. This discrepancy in DC plan engagement underscores a relatively new, but much-discussed, issue in the retirement industry: men and women face different obstacles on their paths to retirement and financial wellness. According to an April 2018 Merrill Lynch and Age Wave study, 70% of women believe they face a drastically different life journey than men. On average, women live five years longer than men, have lower incomes and more frequent work interruptions, and report a greater number of debilitating expenses. Our survey data is consistent with these findings and also reveals additional factors that may contribute to the discrepancy in retirement savings between men and women.
When respondents were asked about factors preventing them from saving for retirement, approximately 9% more women than men named cost of living, low income and student debt.
On average, women report less usage of employer-provided financial wellness programs than men despite indicating similar interest in them. Among employees without access to financial wellness programs, 57% of men report that they wish their company offered them, while 51% of women answered likewise. Yet, when it comes to usage, 25% less women (50%) than men (75%) take advantage of their employer’s offerings.
One of our most startling gender-related findings is the overall lack of financial literacy among women. A 2016 study from EIB pointed out that women consistently answered “do not know” to questions about financial literacy, even when they knew the correct answer. Our recent survey shows that not much has changed in this regard. Women consistently rank themselves as “novice” or “moderately knowledgeable” about financial topics, while men are far more likely to claim to be either moderately or “very knowledgeable.” Furthermore, women consistently report poorer savings practices, lower overall savings and contributions, less knowledge and less proactivity in seeking professional advice than men. These consistent and significant disparities highlight the growing need among employers and benefit providers to establish methods and programs to improve women’s overall financial wellness.