I am often amazed by how many intelligent, well-educated women have little knowledge and/or interest in investing and retirement planning. As a gender, we have to do something about this. Oh, that’s interesting, is a common response when women ask my friend, a female financial advisor, what she does for a living. And it is often delivered in a tone of voice that conveys just how interesting it is to have one’s teeth extracted or to find a piece of roadkill on one’s doorstep. The subtle cringe that shadows many women’s brows when a financial advisor mentions retirement planning or investment management has become a familiar sight.
Female financial advisors have learned exactly what this trepidatious look means: “I know I need to do something about financial planning but…
- I don’t want to think about it
- I just don’t have any interest in/knowledge of that sort of thing.
For some married women, a third translation is sometimes in order: “My husband handles our investments” (delivered with a tremendous sigh of relief).
Women and Investing Statistics
Well, I’m here to make you cringe even deeper: You have to think about it, you can learn how to do it (and it can be fun!), and what if he’s not around forever (or you split up)? Here is why you need to consider women and investing statistics:
- Of the 62 million wage and salaried women (age 21-64) working in the United States, only 45% participate in a retirement plan.
- Women are more likely to work in part-time jobs that don’t qualify for a retirement plan. In 2009, 24 percent of employed women (aged 20 and older) worked part time, compared to 11 percent of men.
- Almost 30% of non-married women aged 65 or older are poor or near poor. This is compared to only 21% of non-married men in the same age group.
- At age 65 or older, 95 percent of men and women have married at least once; however, at these older ages, three times as many women (41%) as men (13%) are widowed. Women who live alone have the lowest median income of any type of household. In 2009, among those 65 and older, 44 percent of women were married, compared to 74 percent of men. As marital status does impact median income, particularly in those amongst the over 65 age group, we can see why retirement planning is especially important for women.
- Women, on average, earn 76% of what men earn, resulting in an average lifetime earnings differential of $250,000.
- The U.S. entitlement retirement program, Social Security, is based on earnings made in one’s lifetime. Women not only earn less than men, on average, but they also leave the workforce for an average of 12 years to care for children or relatives. This reduces their Social Security benefits upon retirement.
- Women live, on average, five to seven years longer than men (depending on when they were born). Their money has to stretch longer, and if they are married, it is important to note that some of the biggest health care costs are incurred in the year prior to death, so if they survive their husbands, it is possible that their financial resources may be reduced by medical expenses. Married women tend to suffer significant losses in income when their spouse dies.
- A couple must have been married for ten years before an ex can claim spousal Social Security benefits, but most divorces happen within the first seven years. This could be a contributing factor as to why more older women live in poverty.
- On average, women invest more conservatively than men. Over the long run, this can result in lower returns and more of a risk of your assets not keeping pace with inflation.
Do something about your retirement and investment planning now
Clearly, the caution signs are there, but the good news is that you can start doing something about it now. If you don’t know much about retirement planning or investing, purchase a beginner’s book, join an investment club, or find a financial advisor that you trust who can teach you more about the topic. It is never too late to start planning and increasing your financial literacy. The statistics concerning women and investing show that we need to do something, and the earlier we start, the better.
Imagine what could happen if more women became financially literate and spread that knowledge to their networks of other women. The possibility for increasing awareness is tremendous. Knowledge is most definitely power, so take this information and arm another woman in your life with it by sharing it via email or facebook. She may cringe initially, but in the long run, she will thank you.
- U.S. Department of Commerce Economics and Statistics Administration and Executive Office of the President Office of Management and Budget. March 2011. “Women in America: Indicators of Social and Economic Well-Being.” Retrieved from www.whitehouse.gov/sites/default/files/rss_viewer/Women_in_America.pdf.
- U.S. Department of Labor, Employee Benefits Security Administration. 2008. “Women and Retirement Savings.” Retrieved from www.dol.gov/ebsa/publications/women.html.
- Munnell, Alicia H. and Zhivan, Natalia. 2006. “Earnings and Women’s Retirement Security.” Working Paper No 2006-12. Chestnut Hill, MA: Center for Retirement Research at Boston College.