What are some of the ways that this new legislation can benefit women when it comes to financial planning?
The SECURE 2.0 Act brought significant changes designed to help close existing gaps across the retirement system for both men and women, and broaden the flexibility for retirement contributors to overcome unexpected obstacles to saving. Two provisions, in particular, can be strategic short-term solutions that can help employees stick to their retirement savings plan.
From our recent research, “Women & Retirement Security: Navigating the Financial Vortex,” we know that working women are more likely than men to withdraw from their emergency savings. As unexpected life events come up, especially for women that must navigate child care or elder care for their family, one provision in SECURE 2.0 provides a withdrawal exception for certain distributions used for emergency expenses up to $1,000 for unforeseeable or immediate financial needs relating to personal or family emergency expenses.
Additionally, another provision allows employers to offer employees emergency savings accounts linked to their individual retirement accounts, of which employees can make contributions of up to $2,500. While we still recommend having three to six months of living expenses saved for emergencies, we encourage employees to work with their employers to access plan benefits. These two provisions can help women and their families avoid having to pause or stop contributing to their retirement plans to make up for short-term emergency needs.
These recent legislative changes also highlight the importance of the role employers can have in supporting their employees through various life stages in order to ensure the support that is being made available is actually understood and utilized. The ability to highlight the humanity that exists in partnership between employer and employee is demonstrated by the impact these additional strategies can provide, which may be very meaningful for a family navigating a difficult or unexpected occurrence who also wants to stay on track for longer-term goals, too.
What can women do to catch up on retirement savings if they’ve fallen behind?
As inherent nurturers, women oftentimes sideline their own retirement security and goals by prioritizing the needs of their family and loved ones, as they often spend more time out of the workforce to serve as primary care for children and/or elderly relatives. These unique obstacles can exacerbate the path toward achieving retirement readiness.
However, just as we are instructed to put on our own oxygen mask before helping others, securing your own needs first can often be the best way to secure and protect loved ones, especially when it comes to planning for the unexpected. So how can women put on their “oxygen mask” when it comes to planning for retirement?
Partnering with financial advisors that take a human-focused approach to understand their total financial picture is a solid first step toward catching up on retirement savings. Whether it is seeking out retirement planning through financial education resources that may be offered through an employer or speaking with a financial planner, women should feel empowered to seek resources available to them and gain clarity on their financial priorities. That first step toward securing correct and tailored information can be the most powerful one to get back on a path toward financial security.
What can they do to alleviate their stress around retirement planning?
Our recent research shows that women report more concern and higher levels of stress managing their retirement savings. Additionally, women report lower levels of confidence in their ability to manage them effectively.
We also know that having sufficient savings, knowing when to adjust saving strategy to stay on track and knowing how long savings will last are top concerns for women. While these are common challenges, they are also very personal.
Taking ownership of retirement planning and facing it head on is the best way for women to alleviate stress around it. Working with a retirement planner not only helps women understand the financial resources available to them, but also allows them to understand the tradeoffs and risks that might arise. This preparation can give women the confidence they need to navigate planned and unplanned life occurrences that might impact retirement planning.
