This is a problem. Women are living longer and gaining in assets when compared with their male counterparts, yet only 18 percent of those that are retirement-age can pass a basic quiz on how to make a portfolio last in retirement.
Nearly twice as many retirement-age men can pass, according to The American College of Financial Services, the killjoys who administered the quiz, and although those numbers are still grim, this underscores the trouble women face in their own retirement knowledge.
Even more worrisome is that despite low retirement literacy, the majority of women (55 percent) are still extremely confident that they and their spouses would have enough money to retire comfortably, the college adds.
Women demonstrated lower literacy rates in 10 out of 12 knowledge categories. There was a discrepancy in performance between men and women across the areas of annuity products in retirement (16 percent vs 24 percent), company retirement plans (30 percent vs 40 percent) and investment considerations in retirement planning (21 percent vs 49 percent).
However, women performed just as well as men (76 percent) on the topic of Medicare insurance planning and actually exceed on the topic of paying for long-term care expenses (38 percent vs 35 percent), which is important as women live longer on average.
Retirement Income Literacy: Don’t Know, Don’t Care
Women are aware that they have poor retirement literacy—yet this does not impact their confidence in retirement. Only a third stated they were extremely knowledgeable about retirement income planning, compared to 44 percent of men. However, the majority of women reported they were extremely confident they would have enough money to live comfortably throughout retirement.
“Women face considerable challenges when it comes to preparing for retirement, and lacking financial literacy certainly does not help the cause,” Jocelyn Wright, assistant professor of women’s studies at the college, said in a statement. “This is a problem, especially when a female at age 65 can expect to live another 20 years on average, two years longer than the average man. With this in mind, women cannot depend on their spouse to hold the keys to their retirement.”
Financial Decision-Making: Riding in the Passenger’s Seat
Men tend to think they are the primary decision maker while women tend to believe that they split the decision making.
In fact, there is a disconnect between finances being a team effort. Eighty percent of women said that they shared the decision making with their spouse while only 35 percent of men stated they shared the decision making.
Women were also less likely to use resources such as friends or the internet for advice and information around financial assets.
Interestingly, women respondents who identified themselves as the primary financial decision maker in the household were more than twice as likely to pass the retirement literacy quiz than those that identified themselves as sharing the decision making.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
