Despite fears of a recession, more than nine in 10 women (92%) say they plan to maintain, or even increase, their contributions to retirement accounts, including 401ks or IRAs.
That’s a key finding from new research released today from HerMoney and the Alliance for Lifetime Income, which also revealed that over two-thirds (68%) of women see a U.S. recession ahead. However, in these uncertain times—when just 2% say they doubt or don’t believe a recession is imminent—women said they are doubling down to secure their financial futures.
The fifth chapter of the “State of Women in 2022” study looked closely at women’s economic outlooks and reveals some of the trade-offs they’re willing to make to remain in control of their financial futures.
“Despite believing a recession is on the horizon, women aren’t letting that interfere with their long-term financial goals,” said Jean Chatzky, Alliance for Lifetime Income Fellow and HerMoney CEO. “Not only do women say that they will stay committed to saving for retirement, two-thirds plan to ‘double down’ on their investments and adopt a now-is-the-time-to-buy mindset.”
If the U.S. does enter a recession, women are willing to be conservative elsewhere. Only 5% of women would borrow for big purchases, while seven in 10 (71%) say they will put off big purchases entirely and another quarter (24%) would only pay cash.
Prefer the financial decision-maker role
The new research found four out of five women (80%) prefer making the financial decisions themselves versus deferring to a decision-making partner. This is the same whether currently partnered or single.
“Any financial professional who isn’t thinking daily about how to better meet the wealth management and retirement income needs of American women simply isn’t paying attention.”
Jean Chatzky
However, they don’t mind sharing the breadwinner role. Women are split nearly 50/50 on being the primary breadwinner themselves (51%) or having a partner who is the primary breadwinner (49%).
“Women control a third of total U.S. household financial assets today—more than $10 trillion—and $30 trillion more is expected to shift into the hands of U.S. women over the next three to five years,” Chatzky said. “Any financial professional who isn’t thinking daily about how to better meet the wealth management and retirement income needs of American women simply isn’t paying attention.”
In addition, women are also overwhelmingly focused on taking control of their time. Notably, a majority (61%) would prefer to earn 10% less money and have 10% more time than sacrifice their time to earn more. Even more (74%) would prefer to earn less money in a low-stress job than to take on a stressful job to earn more.
Retirement savings over luxury items
While women are less willing to sacrifice their time, a notable majority of working women are ready to make short-term sacrifices in the name of their financial futures:
- Eyes on the end game: 70% of working women would prefer to max out their annual 401k contribution than use $20,500 toward a short-term goal.
- Savings over shopping sprees: Four out of five working women would prefer to max out their annual IRA contribution (80%) than purchase a $6,000 luxury item or experience (20%).
In general, working women say the top trade-off they make to be able to save for retirement is limiting purchases of luxury goods (79%). Millennials are the most likely to make other sacrifices. They’re significantly more likely to limit memberships and subscriptions (61%) and make housing trade-offs (48%) than Gen Xers and Baby Boomers.
Upon reaching retirement age, the vast majority of working women say they would prefer to delay Social Security to increase their benefit over time (85%) than to take Social Security right away (15%).
“Our research finds that most women, especially as they age, prefer to have a portfolio that generates retirement income they can count on,” said Jean Statler, CEO of the Alliance for Lifetime Income. “An overwhelming 83% percent of working women would choose a portfolio with reliable retirement income over a risky portfolio with potential for higher returns—jumping even higher, to 88%, among Baby Boomers. Women have told us time and time again that they prioritize saving and have peace of mind when they know they have enough protected income to last throughout retirement.”
This online study was conducted from Oct. 4-17, 2022, among over 1,100 women who are members of the HerMoney community. They range in age from 18 to over 75, most are college-educated and employed full-time. Nearly two-thirds are married or partnered.
SEE ALSO:
• What’s the Top (Current) Financial Concern for Women?
• Alliance for Lifetime Income Helping Elton John Say Farewell to Fans
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
