We hope the ladies have heard it by now, and if not, let’s spread the word. Retirement can be extra challenging for women for a wide array of reasons.
As if saving enough isn’t difficult in and of itself, women tend to be less confident when it comes to finances and more risk averse when it comes to investing, despite needing to build up a bigger nest egg than men due to their increased longevity.
MassMutual’s newest white paper, Closing the Retirement Gender Gap: What Your Clients Need to Know About Investing, aims to increase awareness among advisors about retirement challenges specific to women so they can better help female 401k savers enjoy a successful retirement.
“The difficulty that many women face in preparing for retirement leads many to anticipate living less comfortably in retirement and running out of money five years too soon, a stunning development from a retirement-planning perspective,” Teresa Hassara, head of MassMutual’s Workplace Solutions, said in a statement.
In its Women’s Retirement Risk Study, MassMutual learned females anticipate spending 25 years in retirement. Yet, most women predict their income will only last them 20 years.
Even more dangerous, a significant amount of female respondents has no idea how long their savings will last. Overall, 43 percent indicated they are unsure how long they’ll be able to stretch their money in retirement.
When focusing solely on women who have yet to retire, the percentage goes up. Nearly half (46 percent) of female pre-retirees are unsure how long their savings will last.
What’s more, the study revealed that, regardless of gender, most people are not of the mindset that they need to prepare to replace 75 percent of their pre-retirement income to enjoy a secure retirement.
Instead, 45 percent of women indicated that they will only need to replace 50 percent or less. Fewer females who have already retired agree, but the figure is still alarmingly high at 40 percent.
Complicating matters, data show women typically avoid risk to a greater degree than men. The study found females often believe they should invest more conservatively than their male peers once they’ve retired, despite the fact almost all (97 percent of females) said they want their investments to grow.
Further illustrating the tendency to err on the side of caution, 71 percent of women with an advisor said they were urged to invest more aggressively.
But it’s not all bad. There’s hope for the ladies in that they’re more open to investment advice. Almost eight in 10 female retirees are currently consulting professionals about money matters.
Plus women have a propensity to save, to stick with investments longer and to adopt professionally managed asset allocation strategies for retirement (i.e., target date funds), according to the white paper. And these qualities may equate to females being more investment savvy than they think.
“Retirement plan providers and financial advisors need to connect with women and provide more education to help them become more comfortable with longer-term investment concepts such as taking smart risks, meeting income needs and how to balance growth and preservation,” Hassara concluded.
Jessa Claeys is a writer, editor and graphic designer.
