Women under age 30 are nearly twice as likely as men to report feeling “overwhelming” or “high” financial stress levels, according to a study from Financial Finesse.
The report joins a string of studies that probe the trends and tendencies among women consumers in the financial marketplace. The subject is of growing interest to the insurance and financial community, given the pivotal economic position of women in family finances.
Forty-four percent of women are primary breadwinners in their households, noted Prudential in a study released in April. In addition, 27 percent of married women now say they “take control” of financial and retirement planning and manage it themselves, up from 14 percent in 2006.
Despite that, the various studied paint a financial picture of women who are struggling. Many women continue to feel more stress in financial matters than do men, although some are making strides. For advisors, the findings can provide valuable insights into financial areas where women clients can benefit from professional guidance.
Segments with greatest stress
According to financial education company Financial Finesse, middle- and low-income mothers are reporting the greatest financial stress of among all the market segments studied.
For instance, 55 percent of women ages 30-55, with annual household incomes of $60,000 or less, who have minor children, reported experiencing “high” or “overwhelming” levels of financial stress, the Financial Finesse report said. This is 40 percent more than similar-aged male parents in the same income group.
In every age group, women were more likely than men to report significantly higher levels of financial stress, the researchers said.
Men just seem to have an easier time of it. Among those with annual household incomes of under $60,000, men were twice as likely as women to report “no financial stress” (19 percent versus 7 percent), according to the study. The same trend appeared among those under age 30, where 26 percent of men reported having no financial stress, while only 9 percent of women said the same.
A similar pattern appeared in some data in a MassMutual report issued a few weeks ago. The insurer said that nearly half (49 percent) of women pre-retirees reported being “moderately stressed,” while only 38 percent of pre-retired men said the same.
The gap between women and men was narrower among the already retired, but the MassMutual study found it present all the same. Here, 20 percent of women reported feeling at least moderately stressed, while only 15 percent of men said the same.
These similarities in findings between the two studies occurred, even though the focus of study differed: The Financial Finesse study looked at financial issues, while the MassMutual study looked at retirement issues.
That could be a wake-up call for advisors in either market. The call is to be extra-aware that some women clients, especially younger women clients, would likely appreciate an advisor-led conversation around strategies to help reduce or modify financial stress.
Solutions need flexibility
But pigeonholing women only for stress reduction talks may miss the mark. This is due to certain other trends picked up in the studies. These findings indicate that women’s stress levels are as unique as they are widespread.
Sometimes, women and men are on the same page. For instance, the Prudential study found that the financial attitudes of men and women are “more alike than different.”
In particular, both genders in the survey exhibited an “equal amount of comfort and discomfort” with their ability to make wise financial decisions, Prudential said. (The researchers did not use the word “stress,” but “discomfort” is close enough for purposes here.)
Most felt they needed help “in at least a few areas.” For instance, the large majority of women and men (80 percent and 76 percent, respectively) admitted to feeling unprepared to meet long-term financial goals. And 23 percent of each gender said they don’t know what options are available to them.
But the Prudential study also found that age plays a role in issues that concern women the most. The surveyed millennials were more focused on buying a home than were older generations, for instance, and they expressed greater interest in reducing personal debt, helping family members and providing college tuition for their children. Meanwhile, approaching retirement is what stresses baby boomers (38 percent) the most, the study found.
Concerns vary by region and demographics too. For instance, women in the South were most likely to say that being financially secure in widowhood is very important (67 percent versus the national average of 63 percent). Meanwhile, women in the Northeast were most likely to say it is very important to protect investments and retirement savings from volatility (58 percent versus the national average of 51 percent).
Stress levels can change over time, as well, especially with the help of education. The Financial Finesse study noted that 66 percent of all users of its financial education programs were women, and those women “appear to be taking steps to improve their finances.”
In addition, household income, personal circumstances and a host of other factors affect women’s stress levels and financial choices. For instance, 31 percent of women in the Prudential study said that not having enough disposable income was their top financial planning hurdle. They also complained of lack time to spend on financial planning and difficulty understanding financial jargon.
The Financial Finesse study noted that the presence of minor children in the household impacts women’s stress levels. For example, 10 percent of women with minor children reported overwhelming stress compared to only 3 percent of those without minor children.
The economy is a factor too. Women appear to be feeling more financially secure now compared with during the 2008 financial crisis, the Prudential study pointed out. However, only 20 percent said they feel well prepared to make smart financial decisions, so other factors are in play as well.
The impact of retirement
The pre-retirement years can be particularly stressful for women, according to the MassMutual study, but retirement itself and having a defined contribution (DC) plan seem to help.
"We know that women often experience high levels of stress before retirement as they juggle both professional and family responsibilities (and) that the stress women feel often carries over into retirement,” said Elaine Sarsynski in commenting on the study. She is executive vice president at MassMutual Retirement Services.
But MassMutual is hearing that women often make more of their retirement opportunities and experiences than men, Sarsynski said. In fact, according to the MassMutual study, nearly three-quarters of both women and men reported feeling happy in retirement.
Regarding DC retirement plans, the same study found that 74 percent of DC plan participants reported being "extremely" or "quite a bit" happy compared to 68 percent of non-participants. In addition, 70 percent of DC participants reported being "extremely" or "quite a bit" relaxed compared to 61 percent with no plan.
That’s resonates with a trend detected in a MassMutual study from last year, that women’s DC account balances have been climbing faster than men's.
In the Prudential study, researchers found a worrisome retirement trend, however. Only 33 percent of the women said they were on track or ahead of schedule in planning or saving for retirement — down from 46 percent in 2008, although up from 24 percent in 2012.
But the topic is on their radar screen. In fact, women’s top long-term financial goal is “having enough money to maintain their lifestyle in retirement,” the Prudential researchers found. That’s followed by “not becoming a financial burden to loved ones,” and “having enough money to pay for health care costs.”
Role of the advisor
It’s not a stretch to assume that advisors who take the time and effort to educate financially stressed women clients will likely see those stress levels go down in many cases. However, advisors and the insurance and financial services industry in general will need to address a critical issue identified by Prudential. This is a decline in women’s use of advisors.
According to the Prudential study, only 31 percent of women are using a financial professional now, down from 48 percent in 2008. That’s even though “more than half the women who use an advisor (53 percent) consider themselves on track or ahead of schedule in planning and saving for retirement, versus only 23 percent of those who do not use an advisor.”
InsuranceNewsNet Editor-at-Large Linda Koco, MBA, specializes in life insurance, annuities and income planning. Linda can be reached at firstname.lastname@example.org.
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