Retirement Weekly: Women were hit hardest by COVID financial setbacks

A report issued in October by the Transamerica Center for Retirement Studies showed that’s translating into greater concerns among women (as well as men) about their financial future.  Transamerica has published studies based on surveys of workers for 21 years. This report focused on women’s health, finances and retirement outlook in the wake of COVID-19.

The findings provided some reasons for optimism: Most women and men surveyed by Transamerica were happy with their lives and were confident they would reach their financial goals, including a comfortable retirement. And a solid majority continued to fund their retirement accounts even as businesses closed, states and cities locked down, and hundreds of thousands of Americans died from COVID-19.

“It is remarkable that such a high percentage, four in five workers, continued saving for retirement–even at that darkest hour, or [during] what let’s hope was the darkest hour of the economy and the pandemic,” said Catherine Collinson, chief executive and president of Transamerica Institute, a nonprofit private foundation that oversaw the study.

But the pandemic took its toll. The Transamerica survey found:

• 51% of women (and 48% of men) reported COVID had hurt their financial situation.
• Far fewer women than men expect to retire before age 65.
• Women were much less likely than men to be confident in their ability to retire comfortably.
• Although around 40% of both men and women were afraid of outliving their money in retirement, more women than men worried Social Security will be reduced or disappear in the future, maybe because a significantly larger percentage of women said Social Security was likely to be their primary source of retirement income.
• Women had a median $57,000 in retirement savings, less than half the $118,000 men had. Their median emergency fund savings were $4,000, also less than half the $10,000 men had saved.

The survey was conducted online by The Harris Poll and got over 3,000 respondents, 55% of them men. The poll was taken late last year among full-time employees at for-profit corporations, so it did not capture the views of self-employed people or those out of the workforce. Collinson said Transamerica has pollsters in the field right now to update the findings.

In an interview, Collinson told me that COVID had not so much created new problems for women workers as exacerbated the disparities already present.

“The pandemic has been difficult for both women and men,” she said. “But as we look at the setbacks that women have faced, what it means is that what was already a very difficult mountain to climb in some ways just got even taller.”

And even in cases where women and men expressed similar concerns about retirement readiness or financial setbacks, “because women were already in a more vulnerable position before the pandemic, these setbacks, or these negative experiences, make it more difficult for them to recover than men, even if we look at percentages being somewhat similar,” she said.

Their different life experiences—principally child rearing, which still falls disproportionately on women—contribute directly to the gap in retirement savings and the standard of living those savings can support in retirement.

“Women are more likely to take time out of the workforce and in doing so, give up the income and employer benefits and Social Security credits, when they take time out for parenting and caregiving. And statistically, women live longer than men, which means we need to be saving for even longer retirements,’ said Collinson.

She recommends women and men take a few simple steps to stay or get back on track financially.

First, create a budget. “A really important starting point is just know where you stand financially and assessing your situation and creating a budget is a really important first step,’ she said.

Next, prioritize building a healthy emergency fund. “It’s really important that people have emergency savings to help support them through any major financial shocks, and if we’ve learned anything in the pandemic it’s [that] financial shocks can happen at any time.”

Finally, she said, “formally estimate your retirement savings needs, use a retirement calculator, check with your retirement plan provider, weigh in with a financial adviser.” If your goal is financial security in retirement, you have to know how much you need.

We can’t stop aging and we can’t prevent pandemics. But we can be prepared and know where we stand. That’s good advice for anyone, male or female, in a world where uncertainty rules.