We constantly see research, headlines and experts discussing increasing economic inequality and income volatility in the United States, but many don’t realize these shifts are resulting in fewer people saving, especially for retirement. About 40% of households cannot cover a $400 emergency without borrowing money or selling something. As far as retirement, one national investment company reported in April that the median account value for their customers age 65 and older was $58,035, which translates to just $3,000 in annual income over 20 years in retirement.
Simply put, we are in a national savings and retirement crisis.
This is an Opinion
Women are particularly vulnerable to having insufficient savings later in life: The combination of the wage gap and time spent out of the workforce for maternity or caring for children or aging parents means that women often have two-thirds the retirement savings of men. This, coupled with higher medical costs associated with living longer, means women are 80% more likely to face poverty by age 65, according to the National Institute on Retirement Security.
Action must be taken now to ensure long-term economic security for women. That is why organizations such as the Women’s Foundation of Arkansas, Southern Bancorp Community Partners, Southern Bancorp Bank and others are promoting Save10.
Save10 is a campaign to empower all women in Arkansas to save for life and retirement, with a specific call to action for women ages 18-30 to commit to save 10% of their income for retirement. By asking women to save 10%, the initiative offers a specific, easy-to-remember task that may feel achievable.
The campaign officially launches Oct. 10 — 10/10 — and already more than 4,500 women of all ages and income levels have signed on to Save10. The Save10 movement is encouraging women to take action on a personal level for a larger structural problem. Save10 aims to amplify the pressure for collective action by calling on our partners to not only educate their employees, but to also support policies and programs that facilitate savings and address the larger retirement crisis our country faces.
Save10 celebrates companies offering retirement plans and calls on companies that don’t have retirement plans to consider adopting them. Proposed legislation at the federal level should help make offering plans easier. The SECURE Act, which has passed the U.S. House and is expected to be taken up by the Senate in the fall, would create tax credits for small employers and relax restrictions on multiple-employer plans and annuities as part of retirement plans.
Additionally, studies in behavioral economics show that making saving easy and as automated as possible is effective in actually getting people to save. One best practice encouraged by financial planners and fund managers alike is auto-enrolling employees into retirement plans with a contribution of 6% (and higher) and auto-escalating contributions when employees receive raises, which makes saving easy and automatic.
Employers and community organizations can also provide leadership to help normalize the conversation about money and personal finances by providing meaningful financial education at their institutions and anchoring messages to the Save10 concept. With the many options and tools available, making decisions about savings — especially retirement savings — can be so confusing and overwhelming that people don’t make the attempt. Offering specific and clear guidance free of conflicts of interest will help people feel more confident about their financial decision-making and more likely to commit to action.
We all benefit in the long run when women are empowered to take control of their financial futures because when women succeed, Arkansas succeeds. Join the Save10 army and help create a widespread savings success story in Arkansas.
For more information or to join, contact Stephanie Matthews, Save10 campaign director, at Save10Campaign@Gmail.com.