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Key Takeaways

• During the pandemic, many women have delayed a return to the workplace with an increasingly growing number resigning from their jobs
• Survey reported that in 2021, 42% of women feel burned out often or almost always
• A Defined Benefit plan helps the self-employed and small business owners catch up on retirement through higher deductible limits

Women in corporate America are rising to the moment as strong leaders, but across the spectrum women still remain underrepresented in the top levels of traditional management jobs.. The burdens of the pandemic have affected women disproportionately and many have quit their jobs or are considering leaving the workforce. These conditions make long-term financial planning including saving for retirement even more challenging.

Women Are Significantly Burned Out

Even as the economy has grown strongly and employers have an all-time high record number of job openings, many women have delayed a return to the workplace with an increasingly growing number resigning from their jobs. Why are women departing from their high paying jobs? According to the annual report Women in the Workplace from McKinsey & Co. and LeanIn.Org, women are significantly burned out and much more so than men. The survey, which polled more than 65,000 North American employees, 42% of women and 35% of men reported feeling burned out often or almost always in 2021, compared to 32% of women and 28% of men last year. Women’s organizations and large companies have cautioned that fewer women in the workforce means a weaker economy.

Related Articles

Why More Women Will Have a Retirement Savings Shortfall During the Pandemic

People Followed Their Passions During the Pandemic

Should You Delay Your Retirement During the Health Crisis?

Pivot to Small Business and Entrepreneurship

A growing number of women have decided to start their own businesses during the pandemic – 50 percent of new businesses launched in 2020 were driven by female entrepreneurs. Women-led startups make up for 2.2% of the $150 billion invested in companies by venture capitalists every year. The pool of female entrepreneurs is diverse. According to the Harvard Business Review, in the U.S., “17% of Black women are in the process of starting or running new businesses, compared to just 10% of white women, and 15% of white men.” There are also more resources for women who seek to start their own business. Bank of America recently launched a new platform to educate women entrepreneurs on funding opportunities, including equity, debt and grant capital.

Accelerate Retirement with a Defined Benefit Plan

The pandemic has disproportionately damaged the careers of women –  and short-term disruption in wages can have a surprisingly large impact on long-term retirement plans.

A Defined Benefit plan helps self-employed and small business owners save aggressively for retirement by allowing individuals to make very high tax advantaged contributions with tax deferred growth. If a female small business owner is 50 years or older and is earning high income, she may be eligible to contribute two to three times the amount to a Defined Benefit plan versus a SEP or 401(k).

Client example: A consultant, 53, quit her C-level job and set up an S-Corp for her consultancy and wants to grow her retirement assets quickly and reduce tax liabilities. In 2021, she paid herself $300,000 in W-2 income and contributed $210,000 to her Defined Benefit plan. Her projected Defined Benefit only accumulation will be $2.5 million in 10 years.

Estimate how much you can accumulate in retirement with a Defined Benefit plan.