With all the ink expended on showing how men generally excel women in financial prowess, one might think that men are ahead on retirement planning prowess too. But that’s not necessarily the case.
There is a change afoot, and retirement planning professionals will want to know more about it.
GOBankingRates.com reports that, in a new Internet survey of 10,000 Americans, 20 percent of men said “planning for retirement” is their “biggest financial challenge.” By comparison, only 17 percent of women identified it as a challenge.
Three percentage points is not a big gap. However, one might expect that women, not men, would be in the lead on feeling the challenge of retirement planning.
That expectation derives from widespread documentation about women’s retirement issues. For instance, a new study from Financial Finesse found that women still lag behind men in retirement savings.
The example used was a 45-year-old woman and man. The Financial Finesse Think Tank found that both genders face a significant retirement savings shortfall but that the woman lagged the man by 26 percent. This refers to a shortfall in retirement savings needed to replace 70 percent of income in retirement plus projected health care costs.
At age 65, the gender gap in retirement savings shortfall jumped to 95 percent, with the woman much further behind than the man. The explanation: Women generally have a lower lifetime income, have saved less, and face higher overall retirement and health care costs due to longer life expectancy.
In other words, women definitely are challenged on the retirement front.
What, then, is to explain GOBankingRates’ finding that men are feeling a little more challenged than women about retirement planning?
“It could be that a slightly larger percentage of men see retirement planning as a challenge because it's more on their minds,” Cameron Huddleston, lead reporter at GOBankingRates, said in an email to InsuranceNewsNet.
“The truth is, a greater percentage of men than women work (69.7 percent vs. 57 percent, according to the Bureau of Labor statistics),” Huddleston wrote. “As a result, more men might be the primary earners in a household and feel that it is their responsibility to save for retirement.”
On the other hand, she said, the survey found that the biggest financial challenge facing women is sticking to a budget (22 percent versus 20 percent for men).
“Perhaps this is because many women handle day-to-day household finances, which makes them more aware of how difficult sticking to a budget can be.”
That’s plausible, given that the second biggest challenge that men named was building an investment portfolio (9 percent). This is another financial activity that men may view as within the realm of their responsibility. Notably, only 6 percent of women identified building an investment portfolio as a challenge.
More to the story
But could there be more to the story? Could the previous and/or perceived notions about how men and women regard retirement planning be shifting?
The Financial Finesse report, “2015 Gender Gap in Financial Wellness,” lends some credence to that possibility.
Women employees are taking steps to improve their financial wellness, according to the think tank that wrote the report. In particular, women are making improvements in risk management, estate planning and — here’s the salient point — retirement plan participation.
This is based on analysis of financial wellness assessments of more than 7,750 women and 3,400 men.
The data show that working women are more likely than men to take advantage of financial education and coaching provided by their employers, the report points out.
And although men generally show much more confidence in their financial decision making than women, the researchers found that the “confidence gap” between men and women has narrowed from 18 percentage points in 2012 to 16 percent in 2014.
Women are improving, slowly
Bottom line: Women are slowly becoming better prepared for retirement, according to Financial Finesse.
This appears to be not just in the area of budgeting but also in retirement-critical areas. For instance, between 2012 and 2014, women jumped forward by 4.2 percentage points on the issue of being on target for retirement while men dropped 1.5 points in this area.
During the same two-year period, women also jumped ahead 4.3 points on another financial marker, of having done a portfolio fee analysis, while men dropped 2.3 points on this metric. In addition, women were up 4.2 points on developing a master asset allocation, while men dropped 1.5 points.
The good news is that, in the Financial Finesse report, retirement planning now leads as the “top priority” for both genders, although men were a few points ahead of women here.
In the GOBankingRates study, planning for retirement and sticking to a budget were neck-and-neck as the two “biggest challenges” for men and women combined.
So the genders are finding common ground at last. They share retirement planning as a priority — and a challenge.
InsuranceNewsNet Editor-at-Large Linda Koco, MBA, specializes in life insurance, annuities and income planning. Linda can be reached at [email protected].
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