Women's financial health: It's complicated
At retirement, a woman is likely to have accumulated $1,055,000 less than her male counterparts.
Not only do women face challenges that men do not in earning and saving, other factors affect their journey to financial wellness.
That’s according to a new Merrill Lynch study conducted in partnership with Age Wave, “Women and Financial Wellness: Beyond the Bottom Line,” which finds, among other things, that 70 percent of women believe that men and women have a fundamentally different life journey. Part of the difficulty for women in achieving financial wellness lies in the need for the financial industry to better understand women’s financial concerns and opportunities.
One factor that differentiates men’s and women’s attitudes about investments is that women don’t just worry about how much their investments may make. They also view money as a means of financing the life they want. In fact, 77 percent say they view money for the ways it can help them and their families.
And while 84 percent say that understanding their finances is key to greater career flexibility, that doesn’t mean they understand all aspects—in particular, experiencing a confidence gap when it comes to investing.
While they’re comfortable with many financial tasks—such as paying bills (90 percent) and budgeting (84 percent)—only 52 percent of women say they’re confident about investing, while 68 percent of men express confidence about investing.
Millennial women were the least confident, at just 46 percent, but among women who do invest, 77 percent are confident, and feel they will be able to accumulate enough money to support themselves for life. Not only that, but approximately two thirds of women look to invest in causes that matter to them, rather than just in a stock.
Women also need to consider longevity more than men do, since on average they live five years longer than men—with 81 percent of women living to be centenarians. And while 64 percent of women say they would like to live to 100, few feel financially prepared, with 44 percent of women afraid of running out of money by the time they turn 80.
And because women’s careers are so often interrupted by providing care to others—whether children or elderly relatives—that compounds the effects of lower salaries and fewer financial resources.
In fact, the wealth gap is so large that a woman at retirement age has likely accumulated as much as $1,055,000 less than her male counterparts.
The health care issue looms large in women’s financial wellness, too, with the average woman likely to have higher health costs than the average man in retirement. She’ll probably pay an average of an additional $195,000, since she’ll live longer and have to depend on paid long-term care as she ages. Men usually rely on spouses to provide care, but with women outliving their partners, they’ll have to fend for themselves.
In addition, women do acknowledge shortcomings in their own financial well-being, with 41 percent saying that not investing more is their biggest financial regret. Sixty percent attribute that to lack of knowledge, while 34 percent cite lack of confidence.
But it’s not as if they like to talk about it; 61 percent of women say they would rather discuss details about their own death than talk about their money, and 45 percent of women say they have no financial role model.
It’s not just a matter of pay and savings, however; women’s financial wellness needs to be addressed at all levels, so that disparities in wealth and not just income are accounted for and so that they have better access to wealth escalators (employee benefits such as paid time off and pretax savings opportunities).
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