Less than half of women know how to make their money last in retirement

Uncertainty is always a concern. A better understanding is needed to bridge the knowledge gap between retirement savings and retirement income.

While nearly three in four women (73%) know what steps to take to build their retirement nest egg, less than half (47%) know how to make their money last through retirement. This is according to the latest batch of research from The Alliance for Lifetime Income and HerMoney.

READ THE LATEST RESEARCH HERE: 3 OUT OF 5 WOMEN ARE STRESSED ABOUT MONEY. HERE’S WHAT TO DO

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 top-earning women – those whose annual income from household is $200,000 or more. These new findings are from Chapter Three of the State of Women 2022 study conducted in March 2022 with 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 with annual household incomes below $100,000, saving for retirement remains a clear financial priority – 83% contribute and more than a third (36%) save 15% or more of their income.

READ MORE OF THE LATEST RESEARCH HERE: MORE THAN HALF OF WOMEN CONTROL HOUSEHOLD FINANCES, INVESTMENTS AND RETIREMENT PLANNING

“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 scratching their heads. still lead when it comes to making that money last,” said Jean Chatzky, Lifetime Income Alliance member 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 the oft-quoted figure of $1 million. .

“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 Statler, CEO of the Alliance for Lifetime Income. “I’m not at all surprised that women are saving more, but so many 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 in today’s volatile and uncertain market, by helping women shift their thinking toward retirement income planning and consider annuity-protected income to make sure 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 total American household financial assets – more than $10 trillion – and another $30 trillion are expected to pass through the hands of American women in the next three to next 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 is profound, 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.

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