LINCOLNSHIRE, Ill., June 21, 2016 /PRNewswire/ -- Men and women are on equal footing when it comes to 401(k) plan participation, but research from Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), shows that this equality doesn't hold true when evaluating overall retirement readiness. The data reveals 83 percent of U.S. women aren't saving enough to meet their needs in retirement, compared to 74 percent of men.
Aon Hewitt projects women will need 11.5 times their final pay to meet their needs in retirement, compared to just 10.6 times pay for men. However, there is a gap of 3.3 times pay between what women need and what they're actually on track to have saved in order to retire at age 65. For men, the difference between needs and resources is just 2.0 times pay. This shortfall means women, on average, will need to work until age 69–one year longer than men– in order to meet 100 percent of their needs in retirement.
"Women face significant stumbling blocks when it comes to saving enough for retirement, including longer lifespans, lower salaries and a greater likelihood of taking hardship withdrawals from their 401(k)s," explained Virginia Maguire, director of retirement products and solutions at Aon Hewitt. "Making retirement and financial wellbeing a priority is paramount for overcoming those challenges."
While women and men are participating in employer 401(k) plans at the same rate (79 percent), a new report from Aon Hewitt, which examined the retirement saving and investing behaviors of approximately 3.5 million defined contribution (DC) participants from more than 125 employers, revealed women are saving less. On average, women are contributing 7.5 percent of salary to their 401(k), more than a full percentage point behind their male counterparts (8.7 percent) further creating a gap in savings. Lower savings rates combined with disparities in salaries are contributing to low 401(k) plan balances for women. In 2015, women had an average plan balance of $71,060 compared to $119,150 for men.
Aon Hewitt suggests employers can take steps to help women close the retirement savings gap, including:
"When employers take an active role in helping all workers improve their financial wellbeing and save more for retirement, women will benefit," continued Maguire. "Small changes to plan design and an improved focus on day-to-day finances can go a long way to closing the savings gap."
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