Women and Money: Empowering Financial Wellbeing for the Future
In today's challenging world, it is crucial to recognise the unique financial challenges that women face and their subsequent impact on women’s financial wellbeing.
In the past, financial planning and security was focused primarily on men and the distinct needs and concerns of women were neglected. The financial services industry has made a lot of progress in redressing this balance, but the effects of that historic neglect are still with us, both for women approaching retirement and for younger generations. There is still a great deal of work to be done to close the gap between men and women when it comes to financial security.
Throughout our lifetime, each of us experience situations and setbacks that are unique to us. By acknowledging the additional financial pressures and disadvantages that women encounter during their entire lifespan, it’s easy to see why education is critical in ensuring women’s financial health is protected.
Research by Scottish Widows1 found a persistent gap between men and women when it came to pensions. Women were less likely to cite pension saving as a top priority but are also more worried about whether they are preparing adequately for retirement. Unsurprisingly therefore, women have on average far lower pension savings than men. Among men between 65 and 74 the median level of pensions assets is £250,000, while for women the figure is just £150,000. On top of this women typically need £85,000 more in pensions assets to achieve comparable comfort, due to longer life expectancy.
The gap between men and women’s average pensions savings is widest among those close to or in retirement, but the gap is also present among younger generations.
There are many reasons for this persistent gap between men and women on pensions, the most obvious being the gender pay and income gap. Women are also more likely to take career breaks for childcare or other caregiving roles so interrupting their ability to earn and save for retirement.
Closing the pensions gap is a challenge across the generations. Women closer to retirement need advice and help in adding to their savings while making the most of the investments they already have. Meanwhile, mid-career and younger women need to be educated and empowered to make financial decisions today that will set them on course for greater security in the future.
A good starting point in that education and empowerment is an understanding of how much income they made need in retirement to secure their desired standard of living.
ComfortableSingle: £33,600 p.a.
Couple: £49,700 p.a.
ModerateSingle: £20,800 p.a.
Couple: £30,600 p.a.
MinimumSingle: £10,900 p.a.
Couple: £16,700 p.a.
Understanding women’s wealth challenges today
of women will be the main carer for an elderly relative compared to just 42% of men.
of women have never put their money into an investment product compared to 37% of men.2
It’s clear that the mental health impact of the current cost-of-living crisis is having a substantial influence on productivity and wellbeing levels. To secure their future, women are also making greater financial sacrifices to meet the demands of increasing living costs.
These cost-of-living pressures are coming on top of existing financial challenges that have long hampered women’s financial wellbeing.
Our research shows that women who have children earn up to 45% less than those who do not. In addition, their earnings averaged 28% less in the first year after returning to work post-baby. These factors hinder long-term financial security and severely diminish a woman’s overall – and accumulated – wealth.
Other factors highlighted by our research include 1 in 5 women taking time off work to deal with menopausal symptoms, while 76% of women will be the main carer for an elderly relative compared to just 42% of men.
There is also a disparity in the type of savings products that men and women use. Research from YouGov3 shows that 54% of women have never put their money into an investment product compared to 37% of men. Numerous studies have found women tend on average to be more averse to financial risk than men.4 Whatever the reasons for this, a reluctance to take perceived risks with money is a further factor that may be impacting women’s retirement savings. Investing, when young, is one of the surest methods to build savings for later life and a lack of engagement by women in investment is another obstacle to closing the pensions gap.
To meet this challenge, it is essential to empower women financially at every stage of their lives and the workplace is a crucial place where this empowerment can take place. Responsible employers can play a valuable role in creating fair and equitable solutions that support and enhance women’s wealth throughout their financial journeys.
Do you know what financial issues your employees are struggling with, and do you have the right support in place to help them?
How to break down barriers and build women’s financial security
Now more than ever it is essential to educate and empower women with financial knowledge, ensuring they have the right support, resources, and tools available to plan for a financially viable future. This support is needed across the span of women’s careers. Laying the foundations early in a career is one aspect of this, helping women plan for the life stages ahead of them and their possible impact on their financial security. But many women may have missed out on the financial education early in their career so will benefit from support and education later in their working life.
The challenges women face in maintaining and managing their wealth is complex and deeply entwined with their working and personal lives. As a result, employers have a responsibility to recognise the landscape and redress the balance. Not only to benefit the employee, but to the business itself. A stressed and anxious workforce is not conducive to productivity, and with women having the added burden of financial disadvantage working against them, its time organisations began to help shift the dial.
By first identifying the gaps women have in their financial knowledge, employers can equip women with the tools they need to make informed decisions, plan for the future, and navigate any challenges they may encounter. In addition, automatic pension enrolment, goal-setting initiatives and education on investment opportunities are some of the key steps employers can take to help address women's unique financial needs. But education needs to be universal. Whether they are men or women, employers and people managers also need to understand the factors that can put women under pressure financially and in the workplace - tackling this issue is vital for women employees but also for the health and wellbeing of the organisation.
Mercer offers a unique and proven approach of education, guidance, and financial advice to support your employees, helping them take control of their financial lives. Contact us today to learn more about how we can help you support the women within your organisation achieve financial security.