There’s a gender divide in confidence, but women are willing to get help in closing the gap
Because of challenges ranging from lack of confidence to a bleak income outlook, women are less confident in preparing for retirement than men.
According to a recently released retirement risk study by Massachusetts Mutual Life Insurance (MassMutual), women retirees and pre-retirees expect to spend 25 years in retirement on average, as compared to 23 years for men. But women expect their retirement income to last 20 years, whereas men anticipate theirs to be good for 25 years.
The study also found that women are less likely than men to accurately project how long their savings will last in retirement. Forty-three per cent of women — and 46% of female pre-retirees — were unsure of how long their savings will last; the same was found for only one third of men.
A major barrier to retirement preparation among women is a lack of confidence concerning a variety of issues. These include their ability to manage savings and investments, optimize their public pension income, replace a higher percentage of their pre-retirement income, and take on investment risk.
The survey also found that women tend to be less hands-on with their investments. Compared to women, men tended to be more familiar with active mutual funds (85% of men vs. 69% of women), passive funds (80% vs. 61%), customized investments (66% vs. 55%), and target-date funds (64% vs. 49%). Women were also found to prefer “set it and forget it” investment options (74% of women vs. 63% of men); such alternatives were more popular among pre-retired women (79%) than retired women (62%) and pre-retired men (64%).
Relative to men, women were more likely to be concerned about market volatility (78% of women vs. 65% of men), a major stock-market downturn (83% vs. 73%), sustaining major investment losses before retirement (86% vs. 77%), and making an investment decision that results in a significant loss (58% vs. 49%).
“MassMutual's study shows that many women are less comfortable with financial issues and money in general, so it's critical for them to have access to more education, professional financial advice, planning tools and other resources to meet these challenges head on,” said Teresa Hassara, head of MassMutual's Workplace Solutions.
Female participants in the study were more open to receiving financial education and advice than men, Hassara said. Seventy-two per cent of women said they had at least one financial advisor, as opposed to only 57% of men. Retired women were also found to be more likely than their pre-retirement peers to have a financial advisor (79% vs. 68%).
