Gender Differences In Retirement Planning
While research shows that women are more likely than men to take a cautious and socially engaged approach to retirement planning, women often face more financial challenges than men as a result of their lower earnings, prolonged career breaks, and relative longevity, according to a study published in March 2012 by the BMO Retirement Institute.
The report, "Complementary paths to retirement: How men and women can learn from one another," looked at the gender differences in men's and women's approaches to retirement planning, and suggested ways in which they can learn from one another to improve the outcomes of their retirement.
While retired men and women agree that they want good health and more free time with their families, they often experience retirement very differently. First, women tend to live longer than men, and are far more likely than men to live alone in retirement: In 2010, about 8.3 million women aged 65 and over in the United States were living alone, compared to 3 million men in the same age group.
In addition, women tend to have smaller pensions or 401(k) balances to rely on, the report said. On average, women earn less than men while working, and are more likely to have part-time jobs, which often have limited retirement benefits. Women are also more likely to stop working for periods of time to accommodate their role as the family caregiver, which further reduces their ability to save.
Even a married woman who enters retirement may find that funds are depleted if her husband receives substantial amounts of care in his final years, leaving less for her eventual long-term care needs. To make matters worse, when her husband dies, a woman often experiences a steep drop in income resulting from a reduction in the spouse's employer pension and Social Security benefits.
The study also looked at research showing that men and women have very different approaches to preparing for retirement. For example, men are more likely than women to say they feel very confident that they will have saved enough money to live comfortably throughout their retirement; are doing a good job of preparing financially for retirement; and have enough money for both basic and medical expenses.
Meanwhile, women are generally less confident in their knowledge about financial products and services than men, the study found. More male than female respondents in one survey indicated they are somewhat or very knowledgeable about IRAs, Roth IRAs, Rollover IRAs, and Social Security. Research has also shown that men are three times as likely as women to describe their investment style as "aggressive," while women are more likely than men to describe their investment style as "pragmatic" or "conservative." Moreover, nearly half of men surveyed indicated they have a do-it-yourself attitude when it comes to retirement planning, compared to about one-third of the women.
Researchers recommended that women consider being more proactive in enhancing their level of financial literacy, and more engaged in the financial planning process. They also stressed that women should be aware of the dynamics that may put them at a financial disadvantage at retirement. "With an elevated level of confidence in financial matters," researchers said, "women may be more willing to adopt a more aggressive stance in their investment approach that can improve the long-term sustainability of their retirement assets."
On the other hand, men could benefit from being more receptive to advice from experts, and by being more sensitive to their financial limitations, according to the study's authors. "Men would do well to keep in mind that retirement is a life event as well as a financial event, and that preparing for the social aspect of retirement is equally important as preparing for its finances," researchers concluded.
The Top HR Concerns for 2012 and Beyond
The cost of providing health benefits to employees is the leading human resources (HR) concern of companies in 2012, but over the next several years, employers see attracting and retaining talent as their main challenge, according to an annual survey conducted in December 2011 by HR consultancy, Deloitte, in conjunction with the International Society of Certified Employee Benefit Specialists.
The survey of HR professionals at 330 companies representing a diverse cross-section of the U.S.-based employer population by industry and size asked respondents to identify their organization's top compensation and benefits, or "rewards" challenges in 2012. The cost of providing health care benefits to active employees led the list, followed by the willingness or ability of employees to pay for benefit plan coverage and to manage their own reward budget; the ability of reward programs to attract, motivate, and retain the talented employees needed to effectively run the organization; the ability to adjust to and comply with health care reform legislation; and clear alignment of the company's total rewards strategy with its business strategy and brand.
However, when respondents were asked to anticipate their company's top rewards challenges over the next three years, a potential shortage of talent and the ability to attract and retain key employees headed up the list. This finding may suggest that HR professionals believe today's surplus of job seekers has not translated to a talent surplus, and that employers are facing heightened competition for highly skilled talent that is not necessarily present in the large pool of unemployed. Respondents at smaller organizations expressed the most concern about the talent shortage, and this concern was greater among HR professionals at insurance and professional services firms than among those in other industries.
"The survey exposes a widening gap between the dwindling supply of skilled workers in America and the growing demands of the modern workplace," said David Lusk, principal, Deloitte Consulting LLP. "A key challenge ahead for employers will be working to help close this skills gap to maintain a competitive edge in the global marketplace."
When asked about their company's response to the Patient Protection and Affordable Care Act (PPACA), 48% reported that they are taking a "wait and see" approach, indicating no plans to make any coverage changes. Of those who said they plan to make changes, only 17% are considering dropping employer-sponsored coverage for full-time employees, and paying the penalties instead. Another 37% are planning to maintain their grandfathered health plans as long as possible, and 23% are considering reducing the hours below the threshold for part-time employees to avoid having to provide health coverage.
Although 67% of respondents do not expect the PPACA to affect the number of workers who receive health care benefits at their organization, 85% anticipate the legislation will increase benefit costs over the next five years. However, the HR professionals surveyed reported that their organizations are taking steps to address rising health care costs, with 70% considering expanding wellness programs, and 42% planning to introduce incentives for participating in wellness or disease management programs.
When asked whether their organization has redesigned certain aspects of their compensation and equity plans within the past 12 months, or plans to do so over the coming year, 63% said their organization has been reconsidering its overall compensation strategy or philosophy, 38% said their company is making changes to variable cash awards, and 33% indicated they are redesigning their base pay structures.
Fewer Employers Offer Health Benefits To Part-Time Workers
Amid uncertainty about the pace of the economic recovery and the impact of the Federal health care reform law, fewer employers are offering health benefits to part-time workers, and companies are increasingly hiring workers on a part-time, rather than a full-time basis, a new study published in March 2012 by the Employee Benefit Research Institute (EBRI) has found.
The report, "Trends in Health Coverage for Part-Time Workers," written by Paul Fronstin, director of EBRI's health research and education program, found that full-time employees are far more likely than part-time workers to be offered health benefits by their employers, which in turn affects how many are actually enrolled. An analysis of Current Population Survey data showed that, in 2010, 16.8% of part-time workers had health coverage from their own job, down from 18.7% in 2007. By contrast, 60.1% of full-time workers had health benefits from their own job in 2010, down only slightly from 61.3% in 2007.
The results further indicated that 27.6% of part-time workers had no health insurance from any source in 2010, compared to 17.6% of full-time employees. The likelihood that a part-time worker has employment-based coverage as a dependent has fallen in recent years: 32.5% of part-time workers had dependent coverage in 2010, down from 42.6% in 1999, while the percentage of full-time workers with coverage as a dependent declined less dramatically over this period, from 15.6% to 13.3%.
In addition, the analysis showed that small employers are far less likely than larger companies to extend health benefits to part-time employees. Among companies with 200 or more employees, 42% offered health care benefits to part-time workers in 2011, compared to 46% in 2009; while among companies with 3–199 employees, only 15% offered coverage to part-time workers in 2011, down from 30% in 2009.
Fronstin noted that this reduction in coverage for part-time employees may partly be in response to a provision of the Patient Protection and Affordable Care Act (PPACA) that requires employers with 50 or more full-time workers to provide health coverage to full-time workers in 2014, or to pay a penalty. There are also provisions of PPACA that are expected to increase the cost of employer-sponsored health benefits.
Taken together, Fronstin said, these provisions could encourage employers to hire more part-time workers and to create fewer full-time jobs, thereby accelerating a trend that appears to be already underway: the analysis showed that, in 2010, 19.9% of all employees were working on a part-time basis, compared to 16.7% in 2007.
U.S. Executives Rate Government Regulation As Their Greatest Challenge
Government regulation, as well as global political and economic risk, are the most pressing business concerns of CEOs in the U.S. and Europe, whereas Asian executives cite innovation as their leading challenge, closely followed by the need to attract, retain, and reward talent, according to the results of a global survey of business executives released by the Conference Board.
Conducted between September and December 2011, the survey of 800 CEOs, presidents, and chairmen from the world's leading companies asked respondents to identify the most pressing challenges they face in today's business environment.
In the U.S., respondents said government regulation is the most critical challenge they face, followed by global political and economic risk, innovation, and human capital. American CEOs see uncertainties in the regulatory environment as hindering long-term planning.
Meanwhile, the European CEOs polled cited global political and economic risk as their primary challenge, followed by innovation and government regulation, with cost optimization and global expansion tied for fourth; and Asian CEOs identified innovation as their most critical challenge, followed closely by human capital, with global expansion and sustainability tied for third place.
"While American and European CEOs continue to focus on issues related to the Eurozone debt crisis and a changing regulatory environment, their counterparts in Asia appear to be addressing core factors to advance business growth," said Bart van Ark, executive vice president and chief economist at the Conference Board.
Van Ark observed that, whereas Asian companies hoping to sustain recent success into the long-term are turning inward to improve their pipelines of innovation and world-class talent, Western leaders worried about a fragile recovery or a renewed recession in Europe are more concerned about external shocks and pressures.
While the survey revealed interregional discrepancies in the main challenges cited by leading executives, it also showed that priorities varied according to company size and industry, as well as between countries in the same region. Despite these differences at the top, the survey identified a number of broad global trends: Across all regions, the CEOs surveyed indicated that their most critical challenges are innovation, human capital, global and economic risk, government regulation, and global expansion.
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