Better understanding is needed to close the knowledge gap between retirement savings and retirement income
WASHINGTON, May 18, 2022 /PRNewswire/ — Latest research from the Alliance for Lifetime Income and HerMoney reveals that while nearly three in four women (73%) know what steps to take to build their retirement nest egg, less than half (47%) know how the money lasts through retirement.
This uncertainty has created a major area of concern. Half (52%) of women rank lack of money as one of their top two concerns when it comes to retirement and retirement planning, including 46% of the highest earning women – those who have $200,000 or more in the annual household income. These new findings are taken from Chapter Three of the State of Women 2022 study conducted in March 2022 among more than 1,000 female members of the HerMoney community.
Saving for retirement is a priority at all income levels
The good news is that almost all of the women surveyed (91%) contribute to a 401(k), IRA, 403(b) or other investment vehicle dedicated to retirement – and 55% save 15% or more of their retirement income. . Even among women who have less than $100,000 in annual household income, saving for retirement remains a clear financial priority – 83% contribute and more than a third (36%) save 15% or more of their income.
“It’s striking that today, 40 years after 401(k)s went into effect, the vast majority of women in the HerMoney community know how to accumulate enough money for retirement, but are still scratching their head when it comes to making that money last.” mentioned John ChatzkyAlliance for Lifetime Income Fellow and CEO of HerMoney.
More than half think they need at least $3 million to retire
Women are looking for solutions to allay their fears of running out of money. Surprisingly, HerMoney and the Alliance found that more than half believe they will need at least $3 million in their nest egg to retire comfortably – a figure significantly higher than often quoted $1 million figure.
“The women we studied focus almost solely on saving because the end is everything for retirement when it’s just as important to build a retirement income plan that will make your money last,” Chatzky added. “It is therefore not surprising that four in ten women (40%) say that a protected income – a pension or an investment that provides them with a salary for the rest of their life – would alleviate their fears of running out of money. ”
Protected income can only come from three sources: social security, a pension or an annuity. However, most of the women interviewed do not associate a protected income with an annuity. This lack of knowledge about annuities results in only 3% of women saying that buying an annuity is extremely important to secure their future.
“Many financial professionals have done savers a disservice by focusing exclusively on investing and accumulating savings for retirement,” said Jean Staler, CEO of Lifetime Income Alliance. “I’m not at all surprised that women are saving more, but they still don’t know how to make that money last for 20, 30 or more years in retirement. It’s critical that we change that, especially given the volatility current market and uncertainty, helping women shift their thinking toward retirement income planning and consider annuity-protected income to ensure they never run out of money.”
HerMoney and ALI recommend working with trusted financial professionals familiar with retirement income planning. As this research shows, the 44% of women who work with a finance professional are much more likely to know the steps to take to make their money last in retirement (58% vs. 39%).
Statler continued, “Women today control one-third of the total financial assets of American households – more than $10 trillion—and $30 trillion more is expected to pass through the hands of American women over the next three to five years. Any finance professional who isn’t thinking daily about how to better meet the wealth management and retirement income needs of American women is simply not paying attention. The economic strength of women in our country today runs deep, but that doesn’t mean they don’t want guidance.”
Women themselves can learn a lot about retirement income planning by consulting the right, objective and easy-to-use online resources and tools. the Alliance and His money have a variety of tools and guides to help demystify retirement income planning.
The State of Women 2022 is based on an online study conducted in March 2022 among more than 1,000 female members of the HerMoney community. They are between 18 and 75 years old, most have a college education and work full time. Two-thirds are married or in a couple.
About the Alliance for Lifetime Income
The Alliance for Lifetime Income is a Washington, D.C.-based, 501(c)(6) nonprofit educational organization that raises awareness and educates Americans about the value and importance of having income protected for life at the retirement. Our vision is of a country where no American will face the prospect of running out of money in retirement. The Alliance provides consumers and financial advisors with educational resources, interactive tools, and actionable research and information to use in developing retirement income strategies and plans. We believe that focusing attention and conversations on retirement income that lasts a lifetime leads to greater retirement security for millions of Americans.
About HerMoney Media
HerMoney is a new digital media company focused on improving women’s relationship with money. Started by a personal finance expert John Chatzky, HerMoney’s mission is to level the playing field in financial security, trust and power with content that is welcoming, thought-provoking, bold, unbiased and always smart. HerMoney provides the information women need to manage their money so they can focus on their lives. HerMoney Media is the owner of HerMoney.com, as well as DailyWorth.com.
Contact: Haley FryEdelman
SOURCE Alliance for Lifetime Income