Women have recently become the focus of debate between the two primary political parties, with Democrats claiming that Republicans are taking positions on issues that are attacking women’s rights, and therefore waging a “war against women,” while the Republicans are accusing the Democrats of focusing on the wrong issues.
Yet the war against women has nothing to do with women’s rights or a politician’s frenzy to get into the White House. The real war against women is an economic war that has huge consequences for women and our society overall if it doesn’t end soon. The reason is that there is a significant gap between men and women’s financial literacy that is causing more risk for women than ever before since other factors make it even more difficult for women to retire and support themselves financially throughout their lives. When I wrote about the issue last year, I shared that there was a significant gap between the genders. This year Financial Finesse’s research found that not only do women continue to lag behind men when it comes to their financial literacy and knowledge, but the gap between the genders appears to be growing.
Here’s what we found:
Women continue to lack basic money management skills—the foundation of all financial planning.
- Only 43% of women reported having an emergency fund in place to cover unexpected expenses or to pay bills for a few months compared to 63% of men.
- 52% of women said they were comfortable with the amount of (non-mortgage) debt they had compared to 71% of men who felt comfortable about their debt loads.
Women are growing less confident in their investing knowledge, which is crucial to their ability to build their wealth.
- Only 25% of women reported that they rebalance their investment accounts to keep their asset allocation plans on track compared to 49% of men.
- 57% of men said they have taken a risk tolerance assessment and were aware of their investment risk strategy compared to only 37% of women.
Let’s think for a moment about why this is so frightening. Women tend to live on average up to five years longer than men; they typically receive lower benefits in retirement because they earn less than men (nearly 18% less based on recent Bureau of Labor Statistics data), and they spend on average 12 fewer years in the workforce. In addition, women are more likely to spend part of their retirement years alone, as nearly 90% will be solely responsible for their finances at some point in their lives, whether due to the death of a spouse or divorce, according to the National Center for Women and Retirement Research (NCWRR).
Why Does This Gap Matter to Advisors?