Retirement income: Why personalization + protection matters for women

While significant strides have been made in educational attainment, employment, and earnings in recent years, women still face headwinds when it comes to retirement savings. A recent study from Goldman Sachs found that 50% of women are behind schedule on retirement savings, compared to 35% of men.1

The one-size-fits-all retirement savings solutions of the past, while equal in their approach, do not necessarily result in equal outcomes for all plan participants. A more equitable approach to retirement income recognizes the realities and situations faced by different people and adjusts its strategies for better results.

For women who often have more retirement years to plan for than men do, on less lifetime earnings, personalization and protection are essential to achieving equitable outcomes – by focusing on the challenges that disproportionately affect women and helping increase confidence in their retirement readiness.


Why personalization matters

Many traditional wealth planning strategies are largely influenced by the male experience. For example, the assumption that income steadily increases with age is not the reality for many working-age women. While pay parity looks to be in reach for younger workers, the wage gap tends to increase with age –meaning many women are less likely to see the same steady increases as their male counterparts.

In 2022, the pay gap for women ages 25 to 34 was only 8%. However, it more than doubles for women ages 35 to 54 to 17%, and increases to 21% for women ages 55 to 64.2 This may be due to workplace mobility challenges, or different choices about how to balance work and family.

One-size-fits-all approaches to retirement that assume peak earnings mid-to-late career often fail to account for these trends – although they’ve remained consistent for at least the last four decades.2

As a result, career breaks or shifts to a part-time schedule to accommodate caregiving responsibilities, which are more common among women, can produce disparities in retirement income. In fact, two four-year periods out of the workforce for childcare and eldercare can reduce retirement savings by up to 35%.1

These interruptions, combined with lower lifetime earnings, have a snowball effect. Less time to save and fewer opportunities to save could mean foregoing years of contributions, which limits opportunities for money to compound and grow. Lower incomes leaves less to put away in savings, reducing the amount of wealth women can accumulate.

Instead of applying broad-sweeping strategies, we need to design solutions that take into account the needs, concerns, and circumstances of women to achieve outcomes that are more equitable.

Personalized solutions such as managed accounts can help women develop a retirement income strategy tailored to their preferences and personal situations with professionally managed advice based on individual factors such as age, salary, contribution rate, risk tolerance, and out-of-plan assets.

It is a data-driven approach that helps build a better understanding of the unique obstacles faced by female participants to help them get on track.


Why protection matters

On average, women are expected to outlive men by about six years.3 As a result, their money may have to last longer. However, many women are not confident in their retirement savings lasting as long as they do. 

According to our 2022 Retirement Risk Readiness report, over 6 in 10 women are worried about running out of money before they die.4 The majority of women surveyed cited concerns over market downturns and inflation:

  • 62% worried the market will take a downturn and hurt their nest egg.4
  • 70% are concerned the rising cost of living will prevent them from enjoying their retirement.4
  • 63% worried cost-of-living increases could impact their ability to afford necessities.4

For those with a defined contribution plan, such concerns could lead to greater risk-aversion – thus reducing the potential returns women can earn on their retirement savings and leaving them more uncertain about their financial futures.

In order to help improve confidence and achieve equitable outcomes, we need solutions that address women’s longevity and their retirement insecurities. Guaranteed lifetime income products, such as an in-plan annuity, can be one such solution. 

An annuity in an employer-sponsored plan can help build a portion of guaranteed income within participants’ 401(k)s to protect against market volatility and unpredictable lifespans. Additionally, some of these solutions include the potential for increasing income through either built-in or additional cost riders to address inflation risks.

While equitable pay, access to workplace retirement plans, and financial education will continue to be leading factors in women’s ability to achieve a secure retirement, products that focus on personalization and protection have an opportunity to play a key role in bridging gender inequalities.

To learn more about the importance of personalization and protection for all participants, read our latest whitepaper.


For more insights and perspectives including technology, legal, and demographic perspectives in the defined contribution space, see our Insights and Education.

Ready to go more in-depth? Email our team.

1 Navigating the Financial Vortex: Women & Retirement Security, Goldman Sachs, 2022

2 The Gender Wage Gap Endures in the U.S., Pew Research Center, 2023

3 Provisional Life Expectancy Estimates, National Center for Health Statistics, 2022

4 2023 Retirement Risk Readiness Study, conducted by Allianz Life in February 2023 with a nationally representative sample of 1,000 individuals age 25+ in the contiguous U.S. with an annual household income of $50k+ (single) / $75k+ (married/partnered) OR investable assets of $150k.

Annuities can help you meet your long-term retirement goals by offering tax-deferred growth potential, a death benefit during the accumulation phase, and a guaranteed stream of income at retirement.

Allianz Life Insurance Company of North America has been keeping its promises since 1896 by helping Americans achieve their retirement income and protection goals with a variety of annuity and life insurance products.

Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America.