Knowledge Empowering Women for Better Retirement Savings
The retirement income gender gap affects women who live longer, are likely to be single in later life, prioritize less on retirement planning, carry more debt, and earn less. Education can help overcome behavioral challenges such as procrastination and optimism. Research shows workplace financial education programs are effective, especially in encouraging women to save for retirement. Employers can support employees in achieving secure retirements through various strategies like DC plan design, data analytics, and financial wellness programs.
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Presentation Transcript
Discussion on: Can Knowledge Empower Women to Save More for Retirement? Research by Drew M. Anderson and J. Michael Collins, University of Wisconsin-Madison Judy Dougherty Prudential Financial Head of Strategic Initiatives 1
The Retirement Income Gender Gap is Real Women are: Living longer More likely to be single later in life Time-starved Not making retirement planning a priority Carrying more debt Earning less Retirement Income Gap Job Earnings Gap Social Security Gap Retirement Savings Gap 2
Education May Help Overcome Behavioral Challenges I might live how long? Trouble imagining a long life I ll do it later. Procrastination Being overly optimistic It won t happen to me Following the pack I just can t resist Instant gratification I want it now! 3
EMPOWER Experiment: Role of Workplace Financial Education Programs Robust research design: large sample size, accuracy of data, several control groups Key features tested Workplace financial education (e.g., multi-media, constant drip) Peer-to-peer conversation (engagement is key) Encouraging results Effective, especially at getting women to participate Workplace is conducive for education Low cost way to improve outcomes Potential refinements to the research Extend to private sector (fewer pensions, less job stability) Drill down into segments of women (for targeting purposes) Explore the impact of education on contribution levels Explore how other household finances may be affected (suggested by the researchers) Further explore the impact of peer-to-peer conversations 4
How Employers Can Help Employees Achieve Secure Retirements DC Plan Design Data Analytics Understand needs of employee base Automatic enrollment and escalation Targeted communications to segments Target date funds as default investment Optimize budget for employee benefits Efficient structuring of matching contributions Guaranteed lifetime income Financial Wellness Programs Tools and Calculators Retirement calculators Manage day-to-day finances Planning and budgeting tools Achieve important financial goals Online education Protect against key financial risks 5
Secure Retirements are a Win-Win for Employees and Employers Alike Employers Employees Reduced financial stress Increased productivity More control over retirement age Increased ability to retain and recruit talent More financial freedom Better workforce management and cost savings 6
Conclusion The retirement income gender gap is real Financial education can help reduce the gap, as indicated in the EMPOWER research Education is a relatively low-cost way to improve retirement outcomes Results are encouraging, especially in getting employees to participate Potential refinements to the research should be considered (e.g., extend to private sector) However, more needs to be done. Employers can help in two fundamental ways Provide appropriate DC plan defaults for employees Adopt a holistic financial wellness program which includes educating employees to help them make the right financial decisions Secure retirements are good for all For more information, visit research.prudential.com The Prudential Insurance Company of America Newark, NJ 0307937-00001-00 7
