Can Knowledge Empower Women to Save More for Retirement?

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by Drew Anderson, University of Wisconsin-Madison

Women’s retirement account balances lag behind those of similar-aged men, even though women have longer life expectancies. This is partially explained by various factors that contribute to women earning less than men over their lifetimes. Another hypothesis is that women lack empowerment to prepare for retirement, which can be remedied through greater knowledge and attention to retirement planning.

The purpose of this study is to evaluate the impact of an ongoing informational intervention called Embracing and Promoting Options for Women to Enhance Retirement, or EMPOWER. EMPOWER seeks to increase participation and contributions to supplemental retirement accounts, through events hosted by employers and direct communication from employers to women employees. It is a long-term program lasting eight months, and delivering information through multiple media, specific to the problems women face in saving for retirement. EMPOWER was implemented at several State of Wisconsin agencies where employees had access to a voluntary Section 457 retirement savings program (Wisconsin Deferred Compensation, or WDC) in addition to Wisconsin’s public pension system.

This study will estimate the impact of EMPOWER on participation, contributions, and asset allocation in WDC and the pension system, by tracking these choices among the EMPOWER target population. We will compare that population to other workers not exposed to EMPOWER: the same employees before the implementation of the program, women employed at other agencies, and men employed at the same agencies. Using monthly longitudinal data, this triple-difference strategy looks for a divergence in the gender gap in retirement savings, after implementation of EMPOWER, at agencies that implemented the program relative to other agencies. The database will cover four years and more than 31,000 employees.

This research will help us learn whether a lack of knowledge and attention are significant barriers to women’s retirement savings, by measuring the effect of delivering targeted information intended to overcome these barriers. The practical benefit to society of this research is that these interventions can be portable to other populations of workers where women’s savings lag behind men’s, and could increase women’s well-being during their retirement years.

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