Women often provide care for both children and elderly parents and understand the physical and fiscal effects of being a caregiver. This demographic is known as the “Sandwich Generation” because they must balance work with unpaid caregiving responsibilities.
Being in the Sandwich Generation contributes to stress, depression, exhaustion, and financial hardship for caregivers. Many of the challenges women face include helping parents with long-term care and costs, determining money needed for retirement, figuring out healthcare expenses in retirement, paying for children’s education, and determining how to handle disability should working become an issue.
In this paper, Milliman’s Janet Jennings, Sheila Jelinek, and Suzanne Norman explain how multigenerational care affects women’s health costs. They also discuss how women can become more aware of resources and solutions that will help them and their loved ones improve their financial security.
There are some key benefits to using a retirement planning tool. They can offer direction on savings goals. Some can provide a gauge of your retirement readiness compared to the readiness of peers. Many can calculate a probability of success to measure your ability to cover retirement expenses or how much your income and portfolio withdrawals are expected to be.
There are factors, though, that are not in your control. Some of them include retirement plan changes, developments in the real estate market, interest rates, unplanned early retirement, inflation, longevity, debt, and retirement behavior.
In this article, Milliman’s Una Bearden and Alicia Favila discuss in more detail some considerations, benefits, and possible pitfalls of online retirement planning tools.
A recent survey by Prudential reported that 54% of women are
primary breadwinners, but men on average were more likely to say they are on
track to meet their financial goals. Only 54% of women have put aside money for
retirement compared to 61% of men. And when asked about their financial future,
52% of women said they were very worried compared to 42% of men.
Women face unique obstacles in securing the necessary road map for retirement. But as Milliman’s Christine Jello, Suzanne Norman, and Pat Renzi say in their article, “Women and retirement,” there is reason to be optimistic that, through innovative technology and an industry aware of women’s purchasing power, more resources are becoming available to help them chart their financial futures.
While employers may want to provide better options to their employees, the fiduciary, financial, and administrative hurdles are steep. Retirees will have to pick from a small list of solutions until new alternatives are developed. This article by Milliman’s Kari Jakobe summarizes some of the existing approaches commonly used by retirees to convert their retirement distributions into a lifetime of retirement income.
The 2015 Retirement Confidence Survey, published by the Employee Benefit Research Institute, continues to highlight the rise of retirement confidence in American workers. An increase in retirement plan participation (14% in 2013 to 28% in 2015 for those with a retirement plan) seems to closely correlate with the rise in the percentage of workers who are confident about having enough money in retirement (13% in 2013 to 22% in 2015).
The survey findings seem to indicate that more American workers are taking retirement planning into account and they are feeling very confident about having enough money in retirement, both of which may be related to the increase in availability and accessibility of online retirement calculators and a growing confidence in the overall economy. Yet at the same time, the percentage of American workers who report having saved for retirement has stayed fairly consistent at 63%, indicating that more may need to be done in order to assist workers in saving. Here are a few standout figures from the 2015 survey results:
• 80% of current workers believe personal savings will play a large role in their retirement incomes
• 71% of employed workers report their employers offer an employer-sponsored retirement savings plan
• 12% of those without a retirement plan reported feeling very confident
• 50% of those asked what they would do if they were automatically enrolled at 3% said they would raise their contribution rate; only 2% said they would stop it altogether
It seems that, as the economy strengthens, many American workers are comfortable making retirement savings a priority, so what better time to encourage them to make the most of it?
As plan sponsors, what can be done to help keep retirement confidence on the rise for years to come? Here are some ideas.
• If you don’t offer an employer-sponsored plan, consider offering one. Behavioral finance has found that inertia makes humans their own worst enemies when it comes to retirement savings, making it all that more difficult for the 29% of employed workers without an employer-sponsored retirement plan to save for their retirement. Open the door for them to begin saving today!
• If you already offer an employer-sponsored plan, think about offering additional employer-sponsored plans. Employee stock ownership plans (ESOPs), nonqualified retirement plans, cash balance plans—there are a variety of options available that could be used to supplement your current 401(k) plan.
• Or continue to drive participation by considering plan design changes that will promote additional plan participation. Speak with your consultant about the best options for your company.
• Educate participants. Make sure your employees have sufficient information and tools to assist in their retirement planning.
What changes will you make to help your employees’ retirement confidence increase?
The Employee Benefits Research Institute (EBRI) recently issued its 2014 Retirement Confidence Survey. The percentage of American workers who say they are not too confident or not at all confident they will have enough money to live comfortably throughout their retirement years now stands at 43%, down from 49% a year ago. While this is trending in the right direction, it is still concerning that more than four out of every 10 American workers currently put their chances of a comfortable retirement at less than 50-50.
The survey does a good job of dissecting the results to explore correlations. For example, the retirement confidence levels are vastly different between workers who have a retirement plan—e.g., an IRA, a defined contribution (DC) plan, or a defined benefit (DB) plan—compared to those who do not. Of those who have a retirement plan, only 28% say they are not too confident or not at all confident about a comfortable retirement. Of those who do not have a retirement plan, 69% are not too confident or not at all confident. It’s likely that many of these workers have very little personal savings. Add to that everyone’s concern about the path that Social Security is currently on, and it’s no wonder that almost seven out of 10 American workers with no retirement plan take a dim view of their chances for a comfortable retirement.
There’s an obvious solution to increasing retirement confidence in America, which is to get more workers into retirement plans. It may well be that a good portion of that 69% has 401(k) or similar retirement savings vehicles available at their employers, but they are not utilizing them. To get more workers into these plans, employers need to be continuously encouraging their employees and educating them on the power of “starting early,” the benefits of tax-deferred growth, and how they are leaving money on the table if there’s a match. Plus, automatic enrollment is an excellent mechanism to get new employees contributing at the onset. Small employers who do not currently offer a retirement savings vehicle should consider that retirement plans can help attract and retain employees and instill the importance of saving for retirement.
One of the most common 401(k) designs is one in which the employer matches 50 cents of every dollar an employee contributes, up to 6% of pay. Translation: employee contributes 6% of his pay and employer kicks in another 3% of pay, for a total of 9%. A person age 35 making $50,000 doing this every year for 30 years would have about $500,000 at age 65 (assuming 3% pay increases and 6% return on investments). Do you think half a million dollars would boost someone’s retirement confidence level?