Despite the fact that women tend to live longer, female workers typically have lower retirement account balances than their male counterparts. Many factors may contribute to this disparity, including: lower earnings, greater part-time work and time off for child and eldercare, lower levels of financial literacy, and lower risk/return investment choices. As a result, women can face significant hardships during their retirement years, which they may have to deal with on their own.
But is there anything retirement program advisors can do to help reverse this troubling trend? One study attempted to answer this question.
Researchers examined the effect of a multimedia education program called Embracing and Promoting Options for Women to Enhance Retirement (EMPOWER) geared toward increasing female employees’ retirement savings by providing educational content and increasing motivation for contribution. Data was collected on 31,000 male and female Wisconsin public sector workers.
Over a period of several months, some employees received information, motivation and challenges via multimedia channels including email, webinars and live presentations. Workers were not incentivized to participate and were offered individual financial counseling sessions to address their individual retirement needs.
To measure the impact of the program on retirement savings, administrative data over four years compared savings rates between men and women before and after implementation and among agencies that did and did not use the EMPOWER protocol.
The study found that women who received the educational program increased their contributions by 2.6%, effectively reducing the gender retirement gap in this sample by more than 50%.
Employers Can Make a Difference
These findings suggest that human resources and retirement program advisors tasked with helping employees improve their financial wellness have a potentially powerful tool at their disposal to help women increase their retirement preparedness. By improving female workers’ financial literacy and motivation for greater participation in retirement savings programs, employers may be able to help close the financial wellness gender gap significantly.
Information and motivational messaging may require repeated communication via different modalities to affect the level of positive change seen in the Wisconsin study. This is why Fiduciary First offers a variety of educational efforts and tools to assist employees, including in-person and web-based workshops with educational content specifically targeted toward the aggregate concerns of employees for each company as identified by the Personal Financial Wellness Assessment data. One-on-one counseling sessions are then offered by retirement program advisors to help workers make more informed investment decisions based on their own individual goals.
We welcome the opportunity to discuss the retirement needs of your employees and how Fiduciary First can help them be better prepared for retirement. Call 866-625-4611 or email us to receive more information on our 401(k) advisory services or to schedule a no-obligation consultation for your organization.