Women Are Household CFOs, But Need Help With Retirement

More women are serving as their household’s chief financial officer, but they need help with their retirement readiness.

That was one finding in research conducted by The American College of Financial Services, which found that more than 9 in 10 women with partners or spouses lead or equally share their household’s financial decision making. But they “tend to be more modest and humble about their financial and investment knowledge and literacy,” the study said.

The college’s third comprehensive Retirement Income Literacy Survey found gender gaps in retirement income knowledge, as well as knowledge of key financial planning trends.

The report found 82% of older women said they have a plan for retirement income, but only about 1 in 3 has a formal written retirement plan in place. Only 12% of women feel highly knowledgeable about long-term care and only 27% have a plan to fund it, despite the fact that 50% of women expect to require it. Four in ten women (43%) said they feel less comfortable with investment risk because of the COVID-19 crisis.

Yet women demonstrate they are ready and willing to build a meaningful retirement plan. Six in 10 women (61%) believe good advice from a financial professional is very important to satisfactory portfolio performance, more so than men who feel the same way.

Guaranteed income is also a major concern: seventy percent of women emphasize the value of guaranteed income sources, a total that is even higher among eight in ten (80%) Black women and Hispanic women (77%). Yet despite this perceived importance, women rate their own knowledge as low when it comes to the sources to build a guaranteed lifetime income:

• Only two in ten (20%) women feel highly knowledgeable about Social Security.
• Only one out of ten (10%) respondents feel educated about annuity products in retirement.

“I think this study points out a huge opportunity for financial advice, for the industry to respond to this consumer demand for a lot information,” Timi Jorgensen, assistant professor and director of financial literacy at The American College, told InsuranceNewsNet. “Women want help, they want to have this conversation, this level of expertise, with a financial professional.”

Jorgensen suggested advisors who want to help women “start with asking qualitative questions.”

“Maybe something like, ‘What's the worst case scenario that you can envision in retirement?’” You don’t want to be a fearmonger, but you do want to help them address the very real concern about longevity.”

She said advisors need to ask their women clients questions such as:

• What’s your underlying fear in retirement?
• How can we address that?
• What products or services can we put in place?
• What will they mean for your retirement budget?

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].