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Women Face Different Life Journeys and a Huge Wealth Gap: Merrill, Age Wave

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A study released Friday by Merrill Lynch in partnership with Age Wave acknowledges progress women have made personally, professionally and financially, but finds much more needs to be done to level the financial playing field.

Seventy percent of women in the study maintained that women and men have a fundamentally different life journey, reinforcing the need to better understand women’s financial concerns and opportunities, according to Merrill.

“As women are at a tipping point to achieve greater financial empowerment and independence, it is even more essential that we support women in helping them pursue financial security for life,” Lorna Sabbia, head of retirement and personal wealth solutions for Bank of America Merrill Lynch, said in a statement.

“This includes encouraging women to invest more of their assets, save earlier for retirement, and pursue financial solutions that closely align to their personal values and life paths.”

Kantar TNS surveyed 3,707 American adults between Oct. 25 and Nov. 22, 2017. The sample included 2,638 women and 1,069 men across all geographies and education, income and asset levels.

The survey found that women care a lot about investment performance, but also look at money as a way to finance the lives they want. Seventy-seven percent of respondents saw money in terms of what it can do for them and their families.

Eighty-four percent said understanding their finances was key to greater career flexibility. And when it comes to investing, Merrill said about two-thirds of women looked to invest in causes that matter to them, citing a 2017 U.S. Trust report.

Longevity is an especially important factor in women’s financial strategy, given that on average they outlive men by five years. Although 64% of women in the survey said they would like to live to 100, three in five feared they would run out of money.

Worse, 44% said they worried that they would run out of money by age 80.

According to the survey results, 41% of women said not investing more was their biggest regret. Sixty percent of women cited lack of knowledge as the main barrier and 34% lack of confidence.

The survey also showed that confidence can lead to action. Although a big majority of women said they were confident in most financial tasks, such as budgeting and paying bills, their confidence plummeted when it came to managing investments: 52% of women in the sample — and just 46% of millennial women — compared with 68% of male respondents.

However, the 77% of women who said they did invest expected to accumulate enough money to support themselves for life.

Wealth Gap

The study revealed that women experience a gender wealth gap (as opposed to the wage gap) — that is, the difference between men’s and women’s financial resources across their lifetimes, including earnings, investments, retirement savings and additional assets.

According to Age Wave calculations, this wealth gap can translate to a woman at retirement age having accumulated as much as $1.055 million less than her male counterparts. Several factors contribute to this gap, according to the study.

For one, many women experience lasting effects when they take time away from the workforce to care for aging parents, their own spouses and their own children.

The findings show that a third of mothers who returned to the workforce after caring for children took on less demanding work, resulting in lower pay. Twenty-one percent said they were paid less for the same work they had previously done.

In addition, the average woman is likely to have higher health costs than the average man in retirement because of living longer and having to rely on formal long-term care in later years — an additional $195,000 on average, according to Age Wave’s calculation.

A just-released report estimated how much a newly retired traditional couple would pay for health care.

“Women’s life journeys are not only different than men’s, they’re different than the life journeys of our mothers and grandmothers,” Maddy Dychtwald, co-founder and senior vice president of Age Wave, said in the statement. “We have more opportunities and choices when it comes to family, education and careers, but we’re so busy taking care of other people and other priorities, we often don’t take the time to invest in ourselves and our future financial wellness.

“If more women can actively take control of their financial future all along the way, it would not only benefit them, but also their families and our society overall.”

Women’s financial security is about more than closing today’s pay gap, according to Merrill. It is about accumulating assets or wealth at all income levels, and increasing women’s access to wealth escalators, for example, employee benefits such as paid time off and pretax savings opportunities.

It is also about breaking the silence about money. Sixty-one percent of women surveyed said they would rather discuss details about their own death than talk about their money.

Forty-five percent reported that they did not have a financial role model.

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