If you’ve read about the alarming gender gap we’ve recently identified between men’s and women’sfinancial literacy, you might already know some of the risks itposes to plan sponsors from both a financial perspective and from along-term cultural perspective. As employers continue to putmore of the responsibility for funding and managing benefits ontotheir employees, it will be even more important for women toeffectively manage their benefits in order to reach their long-termretirement goals. Here are some of the key findings on thegap:

• 64 percent of women reported having a general knowledge ofstocks, bonds and mutual funds (versus 84 percent of men)
• 25 percent said they felt confident their investments wereallocated appropriately (versus 42 percent of men)
• Only 12 percent of women were confident they’ll beable to replace at least 80 percent of their income inretirement (versus 19 percent of men)

You can find the full report here.

This gap is a big concern since women already face moresignificant financial obstacles than men in planning forretirement. On average, women live three to five yearslonger, earn less, receive a lower monthly benefit from SocialSecurity, and tend to have higher health care costs throughouttheir lives. Yet women are behind in virtually all areas offinancial planning as well as overall financial knowledge andconfidence.

What this means to Plan Sponsors

The gender gap presents consequences that if ignored could endup costing plan sponsors in the long run. The most tangible costscan be broken down into three main categories:

1. Delayed retirement costs

Women are much more likely to delay or forgo retirement thanmen. Sixty-one percent of women age 50-64 indicated they planto delay retirement vs. 45% of men. On top of that, thepercentage of women ages 50 to 64 in the workforce doubled from1950 to 2010, and researchers expect this trend to continue through2020 as more women delay retirement.

This will put a major financial strain on employers due to thecosts incurred whenever an employee delays retirement. It’sbeen estimated that an employee who delays retirement can costanywhere between $10,000 to $50,000 per year in direct tangiblecosts, and on average, employees who delay retirement plan to do sofor three years.

2. Higher Health Care costs

According to our latest study on financial stress, women arethree times more likely to face overwhelming financial stress, acostly proposition for themselves and their companies from a healthcare perspective. With an estimated 60% of illness eitherdirectly or indirectly caused by financial stress, women’sfinancial stress has a direct impact on your organization’s healthcare costs. Over 200 studies—including an AP-AOL Health poll—have shown a direct link between financialstress and costly medical conditions such as high blood pressure,metabolic syndrome, and heart disease, among hundreds of otherdiseases and ailments.

3. Low Return on Investment Associated With CoreBenefits

The gender gap in financial literacy limits employers’ abilityto realize a strong return on investment from their benefitsprograms because women are less likely to take advantage ofbenefits, and less likely to understand how to effectively managethem to achieve critical financial goals. For largecompanies, this could mean millions of dollars going to waste. Studies show that benefits are among the top reasons that anemployee joins or stays at a company, and that an employee’s levelof engagement, job satisfaction, productivity, and performance ishighly correlated with their appreciation of theirbenefits.

There are many tangible and intangible costs plan sponsors facebrought on by the gender gap. The good news is there are waysto reach women with benefits education that motivates them to savemore and change the way they manage their finances to meetimportant retirement and long-term needs. Next month I’llshare some of these best practices so you can help this demographicby providing benefits communication in a way they understand andwill respond to. The benefits will be reaped by both yourfemale employees and your company.