Americans are on a bleak road to retirement, and that's especially true for women, according to new consumer research by Goldman Sachs. But the Wall Street bank also sees this as a lucrative business opportunity as it seeks to diversify revenue streams.
Only 47% of working women in a Goldman survey on women and retirement said they were on track or ahead of schedule to retire, versus 64% of working men. That number doesn't include working-age women who are out of the labor force, such as stay-at-home mothers. On average, women have 30% less saved for retirement than men, the survey said, citing government data. Working women said their biggest concerns were having enough savings for retirement, outpacing inflation, leaving a steady paycheck and healthcare needs. A majority of retired women, 58%, lived on 50% or less of their former income, versus only 44% of retired men.
The data, released earlier this month, is a gender-focused addendum to another Goldman Sachs retirement report published in October.
The once-exclusive investment bank, in another sign of its increasing turn to Main Street for wealth management business, is using the data to support a move into retirement planning solutions specifically for women. Their investable wealth grew faster than men's, worldwide, in recent years and is projected to continue doing so.
"I think [advisors are] going to increasingly need to cater to the female clients as the head CFO of the family," Cynthia Loh, head of product for Goldman Sachs Personal Financial Management Group, said in comments about the industry at Financial Planning's INVEST 2022 conference earlier this year.
Although the Goldman survey reported, across the board, that women lagged men in preparing for retirement and were financially worse off than men in retirement, it also pointed out that women control a third of U.S. household financial assets — $10.9 trillion.
A 2020 McKinsey report, which also quoted that figure, called women the wealth management industry's "new growth customer," projecting that they would control much of the $30 trillion expected to be passed down from baby boomers. The report warned that wealth managers, while beginning to acknowledge the problem, were not doing enough to engage women.
In its report, Goldman recommends customizing retirement plans for women as one way to stand out in the marketplace and help close the retirement gap. For example, corporate retirement plan sponsors "can provide retirement planning resources around caregiving, leaving the workforce, income generation in retirement and more by offering services that support retirement savers based on their unique situation," the report authors wrote.
Goldman's campaign for more corporate employee clients comes as it announced more layoffs last week on top of earlier ones in the fall. This time it plans to cut up to 4,000 employees deemed low performers, amid a broader slowdown in its core businesses of trading and dealmaking. Like many peers in financial services, it continues to lean into wealth management as experts believe the industry will be relatively insulated from the economic downturn expected next year.
Goldman, in its third-quarter earnings presentation, said it will continue its "shift in our customer acquisition strategy" to focus on referrals in its Workplace & Personal Wealth channel via partnerships with around 500 companies that had an estimated 9 million-plus employees who were potential clients.
Candice Tse, global head of strategic advisory solutions at Goldman Sachs Asset Management, said in an interview that the dismal showing of women in the retirement study reflects several factors, including the longstanding wage gap between men and women and women's disproportionate shouldering of unpaid parenting and caregiving work — which means more time out of the workforce and often earlier retirement than men, leading to lower retirement income.
"COVID has greatly impacted [this], especially women more than men," she said, adding that women tended to work in jobs severely affected by earlier pandemic layoffs, such as the service industry.
"They're constantly juggling different financial priorities throughout their career," Tse said. "And yet, we as women live longer, especially compared to male counterparts, so we actually need a lot more money for retirement."
