Women Lack Confidence about Retirement

Women’s confidence in their ability to retire with a comfortable lifestyle has remained low and has not changed since 2004, with only 23% claiming to be very confident their retirement years will be financially acceptable, according to a new survey.

Transamerica’s latest Retirement Survey found that women most frequently cite 401(k) plan accounts and IRAs as their expected primary source of income to cover living expenses at retirement (46%), while 73% of the women surveyed rate a 401(k) or other employee self-funded plan as a very important benefit.

Fifty-eight percent of women also stated that they would choose a job with excellent retirement benefits that meets their minimum salary requirements over a job with higher than expected salary but inferior retirement benefits. In addition, 49% of women whose job does not offer a retirement plan indicated they were very likely to leave for one that does, an increase from 28% in 2004.

According to an announcement about the survey, survey results also revealed little progress—and some alarming trends—in terms of women better preparing themselves for retirement:

There has been a 6% drop in 401(k) plan participation rates among women—from 76% in 2004 to 70% in 2006—while median plan contribution rates remain the same, at 6% of pay.
There also has been a 31% increase in the number of women who were not sure how much they need to save for retirement—up from 11% in 2004 to 42% in 2006. In addition, there was a 12% increase—from 33% to 45%—for those who guessed at their savings estimates.
There has been slight improvement—with a 5% decrease—among those women who stated that they don’t know as much as they should about retirement investing—with 75% in agreement in 2006 versus 80% in 2004.

Covering Living Expenses

According to Transamerica, many women find it difficult to save for retirement while juggling financial priorities. Although saving for retirement is women’s greatest financial priority (21%), almost as many women cite that their highest priority is covering basic living expenses (19%). Covering basic living expenses is also the most frequently cited reason for not saving more for retirement (40%).

“One of the keys to success in saving for retirement is consistently saving over a long period of time to enjoy the benefits of compounding,” said Catherine Collinson, market trends expert for the Transamerica Center for Retirement Studies, in the news release. “Lower wages and breaks in employment not only result in saving less but also limit the opportunity for the savings to grow over time.”

The survey results underscore the need for women to get better educated about retirement planning, according to the news release, with three-quarters of the women surveyed agreeing they don’t know as much about retirement investing as they should.

Over half of the women surveyed (58%) would like to receive more information and advice from their employers on retirement savings, the poll found.

This survey was conducted via telephone by Harris Interactive within the U.S. between July 27 and October 7, 2006 among 1,402 workers who worked full time for pay at a company with at least 10 employees, are age 18 or older, and do not work for the government or a non-profit organization.