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The Unexpected News About Women, Men and Retirement

Who's preparing better financially and what women still need to do

By Kerry Hannon

How’s this for a twist? Women are making strides when it comes to ramping up their financial mojo and saving for retirement. And men are falling back.

The number of women who say they’re on track for retirement climbed 4.2 percent from 2012 to 2014, compared to a dip of 1.5 percent for men, according to The Gender Gap in Financial Literacy, an annual survey released yesterday by Financial Finesse, a financial education firm in El Segundo, Calif., which offers financial wellness programs at more than 600 large employers.

While the increase among women might not seem dramatic, it’s actually quite noteworthy, since nearly everything I read on this subject bemoans the pitiful state of women’s money-management savvy and how men have such a handle on it all.

One reason for the uptick, according to the report: Women employees are becoming more financially confident and making strides in key financial areas, which is narrowing the gap in financial wellness.

How Women Are Preparing Better

Signs of progress include such things as running a basic retirement savings projection calculation — 37 percent of women said they’d taken that step last year, up from 35 percent in 2012. In contrast, the survey found a corresponding drop among men, from 43 percent to 40 percent.

A growing number of women also said they’ve socked away money in an emergency fund, while the percentage of men who said they have one dropped. And women who have “developed a master asset allocation” plan for their investments climbed by 4.2 percent, while the number of men who said they made such a plan slid 1.5 percent.

“We have seen this pattern consistently anecdotally and with hard data,” Liz Davidson, Chief Executive and founder of Financial Finesse told me. “In a bad economy, the [retirement preparedness] gap tends to widen, because women won’t make decisions and men get overconfident thinking, ‘I can time this market, I have had some success and so has my buddy, and I can do this.’”

In a good economy, men can backslide from overconfidence, while women gain confidence about the financial decisions they’re making.

In 2014, women made up two-thirds of employees who completed a detailed financial wellness assessment through the firm’s online Financial Learning Center, up from one-half in 2011. “The usage among women is quite high, and that is exciting,” said Davidson.

Why Men Are Falling Back

Davidson and I surmise the reason more men aren’t tackling the online assessment probably has something to do with a smidgen of bravado. To me, it’s a bit like the way some men won’t ask for directions when they’re lost. “Everyone is individual and different, but there is a phenomenon playing out that women use the service more,” said Davidson.

Davidson also attributes the increasing levels of financial confidence for women to increased media attention to the issue and the rising number of employers offering financial education programs.

The availability of financial wellness benefits at work is growing. More than 90 percent of 250 large employers said they want to introduce or expand their financial wellness programs this year, according to a survey by benefits consulting firm Aon Hewitt.

Two Concerning Findings

While I am heartened by the advances that women are making, a couple of the Financial Finesse findings concern me: Fewer women than men — 80 percent vs. 86 percent — take advantage of employer matches offered in their retirement plans. “That means they are not getting the most out of this important employee benefit,” said Davidson.

Also, a greater percentage of women than men report having taken a retirement plan loan.

Davidson’s theory for these two trends: “If I had to hypothesize, I would say that women are more often responsible for day-to-day finances, so they feel their families’ financial needs merit tapping into the 401(k) or not contributing as much, especially when it comes to using their earnings to pay for a child’s college education.”

Most employers require workers to save between 4 and 6 percent of pay to get the maximum employer match. My advice to women (men, too): Whatever the match, try to take your company up on it.

Where the Gender Gap Is Largest

The largest remaining retirement-prep gap between men and women is in investing and money management.

Men scored 17 points higher than women on “general investment knowledge” in the survey. Davidson and her team call this a “confidence gap” — men show much more confidence in their financial decision-making than women.

For example, 84 percent of men said they had a general investment knowledge regarding stocks, bonds and mutual funds, compared to 67 percent of women. And when asked if they felt confident that their investments are allocated appropriately, about half of men (48 percent) said they did; roughly a third (34 percent) of women felt that way. While 55 percent of men said they had taken a risk tolerance assessment, only 40 percent of women had.


The downer for female and male pre-retirees (ages 55 to 64): Only 26 percent of those women and 35 percent of those men said they’re on target to replace at least 80 percent of their income in retirement.

And among this group, women continue to lag behind their male counterparts: For instance, 78 percent of the pre-retiree men said they had an emergency fund vs. 67 percent of women.

When the Income Disparity Starts

So, despite some good news about women, this survey clearly shows that many women still have a ways to go managing their money, and that truly gets under my skin.

In my opinion, the root of the problem can be traced to the wage gap. It’s really hard to save as much and invest as confidently as men when you don’t have as much money. Period.

The income disparity starts early.

The federal government’s new College Scorecard website, which calculates how much money people who enrolled in 2001 and 2002 were earning 10 years later, found an earnings gender gap at every prominent university, according to a column in The New York Times.

At Duke, my alma mater, for example, women reportedly earned $93,100 per year on average, compared with $123,000 for men, a sizable difference of $29,900.

New U.S. Census Bureau data released just today determined that women and their families are losing $10,672 in income every year due to the gender-based wage gap, says Debra L. Ness, President of the National Partnership for Women & Families.

What Women Need to Do

There are, of course, a myriad of other factors laying the groundwork for a shaky financial future: women typically live longer than men, have less saved (due to that earnings gap) and sometimes take time out of the workforce to raise kids and care for aging relatives (which depresses their earnings and reduces their ability to use employer-sponsored retirement plans).

It’s the reality we face. That means that we women must work harder to make up for those roadblocks.

With that in mind, I felt compelled to ask Davidson for her top tip on how women can bump up their retirement confidence.

“Put the time into understanding yourself,” she said. “Figure out how your brain works, what motivates you. If you’re more of a tech person, what online tools will motivate you? Perhaps a site like can help you get organized. If you’re someone who likes to talk things through, then consider working with a group of women in an investment or savings club, where it’s a more kinesthetic experience and you learn from each other.”

So, know yourself, know what you need to do, and then do it.

Photogtaph of Kerry Hannon
Kerry Hannon is the author of Great Pajama Jobs: Your Complete Guide to Working From Home. She has covered personal finance, retirement and careers for The New York Times, Forbes, Money, U.S. News & World Report and USA Today, among others. She is the author of more than a dozen books including Never Too Old to Get Rich: The Entrepreneur's Guide to Starting a Business Mid-Life, Money Confidence: Really Smart Financial Moves for Newly Single Women and What's Next? Finding Your Passion and Your Dream Job in Your Forties, Fifties and Beyond. Her website is Follow her on Twitter @kerryhannon. Read More
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