Who doesn’t dream of a comfortable, worry-free retirement with plenty of money in the bank to enjoy hobbies, travel and relaxation?More men than women are closer to that goal, as many women still lag behind their male counterparts when it comes to retirement savings.Most women’s total retirement savings is less than men’s across generations, according […]
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Who doesn’t dream of a comfortable, worry-free retirement with plenty of money in the bank to enjoy hobbies, travel and relaxation?
More men than women are closer to that goal, as many women still lag behind their male counterparts when it comes to retirement savings.
Most women’s total retirement savings is less than men’s across generations, according to a November 2022 report from the Los Angeles-based nonprofit Transamerica Center for Retirement Studies.
The report showed an estimated median savings of $101,000 for Baby Boomer women, born between 1946 and 1964, compared to $248,000 for Baby Boomer men, for example.
About 50% of women ages 55 to 66 have no personal retirement savings compared to 47% of men, according to statistics from the U.S. Census Bureau.
Kenneth Russell, president and CEO of Grey Ledge Advisors in Guilford, said there are multiple factors at play.
The gender pay gap is one, he noted.
In 2022, women earned an average of 82 cents for every dollar earned by men, according to the Washington D.C.-based Pew Research Center.
Another factor is that women may temporarily leave the workforce, such as when their children are young, which also means their individual retirement accounts or 401(k)s don’t build up as much, according to Russell.
Bethany Lardaro, vice president, private client advisor at The Washington Trust Co., which has offices in New Haven, noted that women tend to live longer in retirement — nearly six years longer than men, according to the U.S. Centers for Disease Control and Prevention — so their need to save is greater.
“That means our capital needs to fund our retirement are greater than our male counterparts,” Lardaro said. “So, it’s important women develop a financial plan to build and maintain their wealth.”
There are positive trends for women’s quest to reach their financial goals.
According to a 2021 Fidelity Investments “2021 Women and Investing Study,” 67% of women are now investing outside of retirement, up from 44% in 2018.
Analysis of more than 5 million Fidelity customers over the last 10 years finds that, on average, women outperformed their male counterparts by 0.4%.
However, only 33% of women feel confident in their ability to make investment decisions and just 42% of women feel confident in their ability to save for the long term, including for retirement, according to the study. It indicates that 69% of women wish they had started investing their extra savings earlier.
Gender differences
Women do have several factors going for them, such as a tendency to be more cautious, according to Russell.
“Women tend to be more conservative investors than men, which is actually a good thing,” Russell said. “Men tend to suffer from some behavioral finance bias. Men generally believe they are better at investing than they are. They tend to overly and aggressively trade. So, as a result, it has been proven that women’s investment results are generally more consistent and better over time.”
Women’s relative lack of confidence in their investment ability can actually help them, according to Russell.
“Women don’t take undue risks,” Russell said. “They are better at buying and holding. Studies have shown that women work better with advisors and listen to their advisors, and as a result, they tend to have better investment funds.”
Lindsey Allard, partner at Beirne Wealth Consulting Services LLC in Shelton, in 2018 launched Women on Wealth, a platform to help women make informed financial decisions and to encourage financial and personal growth.
She said she sees positive trends for women in investing.
“Women have been taking control of their current financial state and their financial future, as women are managing more money, more assets than ever before,” Allard said. “I think that there is a real opportunity for women to take even more control of their financial futures moving forward, whether that means retirement, starting a business or whatever their goals are.”
Tips, tricks and solutions
What do experts recommend women do to invest more, increase their portfolios and help close any gender savings gap?
Russell recommends starting with what you think you can afford, then investing a little bit more.
“If you think you can handle 6% of an investment amount, maybe try 8 or 9%, and let that run,” Russell said. “Then every year, increase that a little bit. Unlike spending, like on a credit card or house, you can always dial back the amount you invest. Find your comfort zone and get a little further out of it.”
Allard also recommends women work with a financial professional, someone you trust and have confidence in, for a long-term relationship. Make sure your risk tolerance aligns with your goals and any market volatility, she said.
“If you are beginning to invest, or you are unsure about your current situation, it is very important to have someone in your corner who you trust, who you know is a fiduciary and is acting on your behalf, during these uncertain times in the world and in the market,” Allard said.
Once you have that relationship and have set goals, such as retirement or starting or selling a business, Lardaro recommends you periodically check in to evaluate your progress.
“That is where we can take control and exert our power to build our wealth and maintain our seat at the table,” Lardaro said. “Look at creating your financial plan as a form of self-care. It is an investment in yourself and your future.”
Lardaro also recommends automatic savings plans, such as a payroll deduction that goes into a savings account to help build an emergency or rainy day fund. Lardaro suggests keeping savings separate from accounts tied to debit cards or online banking so there is less temptation to access the funds.
“Most importantly, max out your retirement contributions, so you take advantage of employer matches,” Lardaro said. “That is money on the table, and we are going to live long, happy and healthy retirements, and so we need to fund that.”
Anne Popkin, president of California-based Newday Impact Investing, said she was raised not to talk about money, but it is important for women to do so if they want to build wealth.
That discussion doesn’t solely have to be with a professional advisor, though Popkin also recommends that women go over their revenue, expenses and goals with a pro.
“Women don’t talk about money with their friends,” Popkin said. “I’m not encouraging you to go out and talk about how wealthy you are, but you should talk to people about potential investments, what you need to retire, and how to get there.”
Trusted friends may also be going through similar financial worries and can be a resource, according to Popkin.
Change needs to come at an early age, with the focus on math and investing being taught to girls in elementary school and at home, Popkin said.
She recommends online games for kids to pick stocks and follow them, such as the SIFMA Foundation's “The Stock Market Game,” to learn investment skills.
