Women and savings: a path to better balance(s)

Women and Savings: A Path to Better Balance(s)

Women face unique savings challenges, and many employers and wealth managers do not adequately address the differences between genders. By better understanding the savings challenges faced by women, employers will not only be able to help female employees meet their savings objectives, but also benefit from an increased ability to attract, retain and motivate their female workforce. Women can also improve their own financial wellness by prioritizing it as they would their families’ health and wellness. Employers and wealth managers have a great opportunity to help women see that importance.

The Issue

In general, women save significantly less than men over their working lives. According to a 2018 study conducted by Prudential, the average woman has saved 43% less for retirement, compared to the average man.[1] This greatly increases the likelihood of a woman living in poverty in retirement and is exacerbated by women’s longer life expectancies. Factors contributing to the savings gap include:

1)    Pay gaps between men and women

2)    A greater tendency for women to exit the workforce to care for children or parents

3)    A lack of confidence in making financial decisions

4)    Not taking on enough risk to meet their financial goals

5)    Focusing on short-term financial issues rather than long-term saving


Although some employers are taking action to resolve the first two issues, employers and wealth managers must be more innovative to address the others. While improved financial knowledge is commonly viewed as a key to improved savings rates, Mercer has found that perceived financial knowledge, or ‘financial courage’, correlates more closely with improved savings outcomes. Women tend to have lower financial courage scores than men, even when they have comparable financial knowledge, which can lead to inertia in decision-making, failure to optimize savings rates, and poor financial wellness. For example, based on Mercer’s When Women Thrive research, 55% of women in the US believe they know less than the average investor, compared with 28% of men.

Differences in contribution levels are not the only hindrance to savings accumulation for women. In fact, women and men generally contribute to retirement plans in similar proportions, but women are less likely to pursue aggressive investments. Women have less comfort with the volatility in riskier investments, resulting in diminished investment returns over a lifetime. For instance, a 2015 BlackRock survey that found that the average female investor keeps 68% of her portfolio in cash, versus 59% for the average man, leading to diminished long-term returns.[2]

Our research also finds that short-term financial issues are more important to many women than long-term saving, particularly for those in a weaker financial position. Boosting long-term savings rates is crucial to improving women’s financial well-being.

Solutions for Employers and Wealth Managers

1)    Focus on improving financial courage

One tactic to improve financial courage among women is to offer options that require limited financial knowledge but provide incremental wins, such as setting default options for contributions and investments. By giving women the opportunity to take gradual steps towards improving their savings rates, they receive positive feedback, driving them to become more engaged with their finances, building financial courage and spurring better decision-making in the future. Wealth managers and robo sites need to encourage systematic and regular contributions to savings and retirement accounts.

2)    Offer tailored retirement solutions to women

Some organizations have begun to tailor their pension offering to women to improve their savings adequacy. Customized offerings that account for differences in needs and behaviors across genders correlate to higher participation and savings rates for women.  Financial education and gender-specific communications are needed to show women the value of pursuing more aggressive investments and to direct women to programs that will help them improve their savings outcomes. These programs are growing in popularity, but from a low base, as according to Mercer’s When Women Thrive research, globally just 9% of organizations offer women-focused retirement and saving programs.

3)    Help women meet short-term financial needs

Expanding the focus beyond saving for retirement to design programs that help employees to manage their finances holistically, through services such as debt management, budgeting and financial coaching, will help to improve results. This is where a financial advisor ought to be stepping up to the responsibility of addressing the holistic financial needs of clients, not merely their retirement savings.

4)    Present goals-based investing as the path to financial security

As women struggle to find time to focus on themselves, employers and wealth managers need to find a way to capture their attention to address their savings and investments. Appealing to a women’s interest in financial security would provide that urgency. Goals-based investing would be a natural fit for women to see the connection between their investment strategy and a secure future.


The Payoff for Employers

Employers who are able to improve savings outcomes for women will see significant benefits in their workforce. First, there is an opportunity for improved engagement and productivity, as the average woman spends 15 hours a week at work worrying about her finances.[3] Next, offering savings programs that are tailored to women is critical to improving gender equity in the organization. This can have a tremendous impact on engaging and leveraging the female workforce, triggering better overall results for the organization.

Employers also have a unique opportunity to improve retention among female employees. A joint survey by Mercer, InHerSight and Ellevate Network revealed that women who are financially stressed are more likely to leave their job for a new company, higher education or unemployment. Finally, financial wellness also contributes to overall health and wellness. Women who report high levels of financial stress often have higher rates of absenteeism and increased healthcare costs. Alleviating that stress can reduce those costs.

The Payoff for Wealth Managers

Wealth managers who work with couples need to ensure the woman is fully integrated in the daily decision-making. Insisting on solely meeting and speaking with the male counterpart ensures that in the case of divorce or death, the female client will go elsewhere where she can build her own relationship with the advisor.

Ensuring your female clients have been well-guided (not patronized) will ensure stickier assets and strong potential for referrals.

[1] Prudential. 2018. “The Financial Wellness Census”

[2] BlackRock. March 5, 2015. “American Women Face Saving for Retirement “Gender Gap” with a Lasting and Harmful Impact”

[3] Mercer’s Inside Employees’ Minds – Women and Wealth, 2017


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This does not contain investment advice relating to your particular circumstances. No investment decision should be made based on this information without first obtaining appropriate professional advice and considering your circumstances. Information contained herein may have been obtained from a range of third party sources. While the information is believed to be reliable, Mercer has not sought to verify it independently. As such, Mercer makes no representations or warranties as to the accuracy of the information presented and takes no responsibility or liability (including for indirect, consequential, or incidental damages) for any error, omission or inaccuracy in the data supplied by any third party.

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Cara Williams
by Cara Williams

Global Wealth Leader, Multinational Client Group, Mercer

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