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Post-COVID Retirement Challenges for Women and How to Fix Them

Experts weigh in on how the pandemic has changed retirement plans, including housing, taxes and healthcare -- especially for women.

For reasons including longevity, earning power and family dynamics, many women face specific obstacles to securing a safe retirement. These challenges have become even greater due to the COVID pandemic and related economic upheaval.

And the pandemic has accelerated many trends that could affect the way we all plan for and live in retirement, according to a recent Merrill Lynch Wealth Management webinar.)

“The pandemic hasn't just changed our daily lives, said Andy Sieg, president of Merrill Lynch Wealth Management. “It's reshaping expectations for what the future may hold nearing in retirement.”

In the webinar, Surya Kolluri, a managing director at Merrill Lynch, addressed the steps women should consider taking now to pursue greater security in retirement.

He noted, for instance, a recent Merrill Lynch study that found women are far likelier to take time off from their jobs than men and that translates into a $1,055,000 cumulative lifetime earnings gap between men and women at retirement age.

Read more about how to prepare for the post-pandemic trends and the new realities ahead, along with other topics from the webinar.

Their life stages and experiences are different in many ways versus men, Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America, said in an interview. "And so how we prepare and how we think about that should be different as well," she said.

What steps might women take to prepare for retirement?

The first step is getting women comfortable about investing earlier, said Kolluri.

And that’s especially needed given that 41% of women wish they had invested more of their money, according to the Merrill Lynch study. “Not investing soon enough,” is their “single biggest regret,” he said.

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In a one-on-one interview, Sabbia said it’s important to get women to become comfortable talking about money and investing. She noted, for instance, that 61% percent of women would rather talk about their own death than money according to Merrill’s Women & Financial Wellness: Beyond The Bottom Line research report.

“It's very difficult for those two things to coexist, but we have to be aware of them,” she said. “And that's important because women make really good investors just like men do. And so that confidence has to catch up and we have to start a little bit early.”

Step two is to make sure their portfolio reflects their risk propensity and what one wants to accomplish in their retirement as well.

According to Sabbia, women, in general, have a lower tolerance to risk than men and that means a woman’s portfolio is oftentimes “lesser weighted to equities.”

Retirement is about long-term investing. “And so being properly allocated to equities is actually a key component to having the nest egg that you desire and that you need for a longer life,” she said.

Having the right asset allocation, said Sabbia, is equally important for women as the need to start investing early.

And step three is to make sure they are contributing to their retirement plan. According to Sabbia, women are participating in their employer-sponsored retirement plans but contributing about three percentage points less than men. “So you want to ensure that you are participating in the benefit programs that you have at the company and participating at a contribution rate that makes sense for your long-term goals,” she said.

In the webinar, Kolluri also suggested “maximizing contributions so that the matching contributions are taken advantage of and no money is left on the table.”

And step four is to have a family conversation about caregiving and developing a logical plan.

Sabbia also noted the role that financial advisers can play in facilitating family conversations about caregiving. It’s important, she said, to have someone who knows you well enough but is not a family member to remove the emotion and have someone who can execute your plan based on your desires.