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Surprise! Women Are More Retirement Savvy Than Men

Steve Pomeranz, Retirement

Adapted from the article on cnbc.com: “Women Save More Than Men Before Retirement” by Sarah O’Brien

Let me ask you this: Between men and women, who do you think knows more about finance, stocks, bonds, ETFs, and other investment securities? Go ahead and take a second, think about it, and pick an answer—men or women?

In most American households (including yours), who makes most or all of the decisions related to retirement savings and investments—the man or the woman??

I wish I could see you all and ask for a show of hands on the answers, but this is radio, so I’ll just cut to the chase. It turns out that women rule the roost when it comes to saving for retirement. And recent research by Vanguard shows that women are the ones signing up for 401(k) plans and saving a larger piece of their salaries compared to their male counterparts. Surprised? I’m sure some of you are!

Data from the Vanguard Center for Retirement Research shows that women save more than men before retirement, yet men have more wealth because they typically earn more. The study found that women are 14 percent more likely to voluntarily take advantage of pre-tax retirement savings accounts than men and save anywhere from 7 percent to 16 percent more than men, depending on income level.

The average retirement account balance across all income levels for women was $79,572 vs. $123,262 for men, but that imbalance is skewed by large differences at the high-income range, which is mostly comprised of men. But when you look at the under-$100,000 crowd, men don’t beat out women’s account balances.

Additionally, although women generally get a bad rap for being more risk-averse than men, the Vanguard study shows that both genders allocate about the same amount of their retirement money to stocks and index funds.

The study also found that more women (42 percent) than men (36 percent) use professionally managed portfolio allocations, such as target-date funds. In other words, men are more likely to cobble together their own portfolio than choose a target-date fund or similar option that would put their allocation of stocks and bonds in the hands of someone else.

Similarly, many financial advisors observe that men are less likely to be long-term planners or to seek out a financial pro for help.  Compare that to the stereotype that men won’t ask for directions if they are lost but women will, and the same applies when it comes to asking for financial hydrocodone generic numbers advice. Men seem to think they should know everything that’s going on in the financial world, but we need to break that mindset.  So all my male listeners, going forward, please don’t be embarrassed to ask for advice. It’s not a sign of weakness; it’s actually a sign that you’re smart.

Women tend to plan much more for the long term and are on the right track from the very beginning. But with men, it’s only when there’s an immediate need—like if they are close to retirement—that they usually seek advice.

But it’s not all bad news for men. A study from the Global Financial Literacy Excellence Center showed that while both men and women  scored poorly on a three-question financial literacy quiz, men did better. Just 22 percent of the women surveyed for the study answered all three questions correctly, compared with 38 percent of men acing the quiz. But men were more confident about their financial knowledge than they should be. And even when they were wrong, they reported being “very confident” about their answers. Women, in contrast, were more likely to admit when they were unsure of the answer.

In other words, women, generally speaking, can ask for directions when they’re lost and, it appears, also ask for financial advice. (As an aside, I have to admit that I hate asking for directions but force myself to do it anyway.)

So women are more security-oriented and better savers. With married couples, some financial planners discourage having meetings with just the husband because of the female habit of keeping expectations and risk at rational levels; but, beyond that, we truly want both parties in the room because— let’s face it—they’re in this together and their combined perspective can lead to a better outcome.

So regardless of which gender does better with their finances, it is vitally important that everyone—men and women—sign up for retirement plans such as the 401(k) and take advantage of socking away pre-tax income through automatic payroll deductions at work.

But, as I have pointed out before, only about 46 percent of all workers participate in workplace retirement plans, and I am on a mission to see that number move up to almost 100 percent and see all of you become financially independent and have a future free from money worries, so you can live your one best life.

*Direct quotes from “Women Save More Than Men Before Retirement” by Sarah O’Brien of cnbc.com are noted by italics.

I've been an investment strategist and adviser for over 35 years, leading with a mission of unbiased advice to educate and protect listeners on my weekly radio show on NPR affiliates nationwide. I have been named a “Top 100 Wealth Advisor” by Worth Magazine and “Top Advisor” by Reuters.