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Retirement Literacy Among Women (and Men) Is Woefully Low: Survey

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A large majority of Americans, especially women, have failing grades when it comes to retirement literacy, according to a new study by the American College of Financial Services. In fact, 89% of women and 72% of men failed a 38-question test on retirement literacy in a population of 1,509 (821 women, 688 men).

“Unlike men who claim to have higher levels of knowledge and then test poorly, women’s self- reported knowledge is more aligned to their actual literacy scores,” according to the study.

Only 14% of women felt knowledgeable about retirement income planning while only 12% felt “highly knowledgeable” about long-term care, and only 27% have a plan to fund LTC despite 50% stating they expect to be using it.

That said, most women have been involved in dealing with household financial management, the study found, with nine in 10 women who said they equally shared those and investment decision making duties with partners or spouses.

The online study, conducted by Greenwald & Associates for The American College, was done from April 29 through May 18, 2020. Respondents were age 50 to 75 and had at least $100,000 in household assets, not including their primary residence.

Other findings were:

  • 43% of women felt less comfortable with investment risk because of the COVID-19 crisis;
  • 16% of women feel very knowledgeable about investment considerations for retirement planning;
  • 14% of women felt knowledgeable about strategies for sustaining income in retirement.

“Advisors need to understand that women may come to the table with different approaches to retirement planning, with many thinking about finances holistically and maybe more conservatively than men,” said Hilary Fiorella, executive director of the Center for Women in Financial Services at the college, in a statement.

“Whether that conservatism is based on fear or misinformation is an ideal place to start a conversation with an advisor. While this research suggests lower retirement literacy levels than men, women also demonstrate an awareness of their knowledge level, admitting what they don’t know and prioritizing financial education and advice — the sign of an ideal client relationship.”

Guaranteed Income, Long-Term Care

Although guaranteed income is a major concern to 70% of women surveyed (including 80% of Black women and 77% of Hispanic women), their knowledge level is low. Indeed, only 20% of women felt highly knowledgeable about Social Security while only 10% felt educated about annuity products.

Only 30% of women stated correctly that most long-term care expenses were paid by Medicaid (versus one in five men), and 34% were worried about paying for long-term care.

Also, while only 27% of women have a plan to fund long-term care needs, the same amount claim they have any type of insurance that would cover their long term needs.

Women Want Good Advice

Six in 10 women stated they had an ongoing relationship with an advisor (versus 54% of men). Further, 65% of women and 62% of men believed a well-diversified portfolio was “highly” important to performance. Men also believed not reacting to down markets was equally important.

Finally, a majority of women, 56%, believed good advice from a financial advisor was important to portfolio performance, vs. 48% of men.

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