Hewitt Research Shows Women Much Less Prepared to Retire Than Men

Business Wire, July 9, 2008

Longer Life Spans, Lower Salaries and Conservative Saving Habits Key Factors in Gap Between How Much Women Need for Retirement and Their Actual Saving Behaviors

LINCOLNSHIRE, Ill. -- Despite having a more powerful presence in shaping today's workforce, women continue to be less prepared for retirement than men, according to a new study by Hewitt Associates, a global human resources consulting and outsourcing company. In fact, Hewitt's study not only found that women need to save more for retirement than men, but it also highlighted that the gap between the amount women need to save and the amount they are actually saving is larger than the gap for men. Moreover, this gap will continue to grow due to lower salaries, conservative investing, longer life expectancies and higher retiree medical needs.

The study, which examined the projected retirement levels of nearly 2 million employees at 72 large U.S. companies, found that both men and women are on track to replace 85 percent of pay at retirement, assuming average life expectancy. However, women, on average, need to replace nearly 130 percent of their final pay at retirement--7 percentage points more than men. When factoring in differences in longevity, that disparity jumps to 10 percentage points. In other words, the average woman will need to save 2 percent of pay more per year than the average man, over 30 years, to achieve the same standard of living.

"There are multiple barriers women face that automatically put them at a disadvantage when it comes to meeting adequate retirement income levels--some of which are preventable and some of which are not," said Alison Borland, defined contribution consulting practice leader at Hewitt Associates. "But despite these challenges, it is possible for women to make a significant impact on the amount they amass in their retirement nest eggs if they are willing to understand the challenges they face and take a few small steps toward improving their saving and investing behaviors."

Factors Affecting Women's Retirement Readiness

Hewitt's study and other research reveal that multiple factors--both financial and socioeconomic--contribute to the gap in retirement income replacement rates between women and men. Those factors include women's likelihood to:

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How Can Women Close the Gap?

Despite the challenges they face, it is possible for women to get to a more comfortable place in retirement. In fact, making a few easy changes to their saving and investing behaviors can have a significant impact in helping women shrink the retirement income gap and get to more appropriate retirement levels.

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About Hewitt Associates

For more than 65 years, Hewitt Associates (NYSE:HEW) has provided clients with best-in-class human resources consulting and outsourcing services. Hewitt consults with more than 3,000 large and mid-size companies around the globe to develop and implement HR business strategies covering retirement, financial and health management; compensation and total rewards; and performance, talent and change management. As a market leader in benefits administration, Hewitt delivers health care and retirement programs to millions of participants and retirees, on behalf of more than 300 organizations worldwide. In addition, more than 30 clients rely on Hewitt to provide a broader range of human resources business process outsourcing services to nearly a million client employees. Located in 33 countries, Hewitt employs approximately 23,000 associates. For more information, please visit www.hewitt.com.

(i) Suze Orman, Women & Money: Owning the Power to Control Your Destiny (Spiegel & Grau, 2007).

(ii) 2006 Allianz Insurance Survey