American women are feeling more optimistic about their financial futures and confident about their money decisions compared with a year ago, according to the latest Global Investor Pulse survey from BlackRock.
The report suggests that men and women have lessons to learn from one another, particularly when it comes to planning for retirement. About half (51 percent) of women report feeling positive about their financial futures, compared with 46 percent one year ago.
Also, 42 percent say they are confident they are making the right savings and investment decisions, compared with 34 percent one year ago. Both women (43 percent) and men (41 percent) put a high priority on saving to ensure they live comfortably in retirement.
But women are considerably less likely than men to actually be saving for retirement (55 percent vs. 65 percent). Perhaps as a result, women are more concerned than men (75 percent vs. 68 percent) about their ability to meet their retirement goals.
“It’s clear that women need to become much more active in managing their money toward urgent long-term goals, particularly retirement,” says Heather Pelant, head of personal investing at BlackRock. “But our survey also indicates that women have some key positive financial instincts that can lend valuable support to their saving and investing efforts.”
Retirement savings gender gap
On average, Americans of both genders have similar goals for an annual retirement income, with men hoping to generate $45,956, and women hoping to generate $45,018 each year. However, according to the survey, women aged 55 to 65, who are closest to retirement, have accumulated $118,000 in average retirement savings that could provide $7,872 of estimated annual retirement income.
That compares with men aged 55 to 65 who have accumulated average retirement savings of $162,000, which could provide $10,807 of estimated annual retirement income, according to the BlackRock CoRI Index 2015. Despite the similarity in both expectation and shortfall, only 36 percent of men express concern regarding their ability to achieve the annual income goal they need in retirement.
A much more realistic 52 percent of women expressed the same concern. The good news is that 51 percent of women indicated that they took advantage of a workplace retirement savings plan to get started investing, compared with 43 percent of men.
“For women, workplace plans represent a critical step towards their most important financial goals, suggesting that employers need to keep the characteristics and needs particularly of women firmly in mind in their efforts to help their employees become more effective savers and investors,” says Heather Pelant.
Different goals drive money views
Women and men look at money and investing in different ways, the survey shows. Women tend to emphasize the day-to-day health of their household’s finances. While 61 percent of women follow a household budget, just 23 percent regularly review the performance of their savings and investments (vs. 33 percent of men). And women assign more importance than men to paying off debt (55 percent vs. 46 percent).
Men put a greater priority than women on growing their wealth (35 percent vs. 28 percent, respectively) and holding on to their wealth (26 percent vs. 20 percent, respectively). Men are more likely than women to say “I consider myself an investor” (40 percent vs. 22 percent). They are more likely to hold stocks than women and have less of their assets in low-return cash (60 percent of the portfolio for men vs. 71 percent for women).
Men also are more likely to say that they enjoy managing their investments (46 percent vs. 26 percent). When asked how the idea of investing makes them feel, men are more likely than women to associate words like “hopeful” and “optimistic,” while women most associated “nervous” and “risky.”
However, the survey shows that adopting a focus on growing wealth, while a higher priority for men, can definitely help women. Among women who have made wealth growth a priority, 63 percent have investments (vs. 38 percent who do not make growing their wealth a priority), and they are twice as likely to regularly put money into savings and investments.
Women: More Realistic, Inclined to Seek Help
Though less engaged as investors, women might be more sensitive than men to the realities and requirements of successful investing. Women are highly attuned to risk.
The survey shows that they are generally less inclined to take on investment risk to achieve financial return and are more cautious about the future of the stock market. They also are more likely than men to ask for advice for their investment and savings decision-making (64 percent vs. 55 percent) and more likely to say they value professional advice (74 percent vs. 64 percent).
“Overall, in deploying their money, women are more focused on managing risks to their financial security and stability over the short term, and men are more focused on achieving long-term money goals,” says Heather Pelant. “In fact, American women and men have a lot to learn from one another, as good financial and investment planning needs to reflect both objectives.”