Marijoyce Ryan, BridgeTower Media Newswires
Generally speaking, men have larger retirement savings in their 401(k) accounts than women. This is a function of women taking breaks from the workforce due to child rearing, caretaking and wage differences, among other reasons. As such, women often have a less secure retirement outlook than men. Men generally have a higher confidence level than women in their ability to retire comfortably.
In a 2018 survey by The Motley Fool, and published by Money Crashers this month, women and men have difference financial goals. For example, men cite saving for a vacation followed by paying off credit card debt. For women, it was the opposite. However, women also were more likely to state that paying off student debt was also a priority (women tend to have more student and medical debt than men). Men, on the other hand, stated that they wanted to buy a home, car or find a new job.
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Saving
When it comes to retirement savings, on a dollar basis, women save less than men based on a 2015 survey by BMO Harris as published in the Money Crashers in July 2019. However, men tend to save less than women as a percent of pay. In the end, many women still have lower overall balances than men in various stages of life due to higher wages. In a 2015 Vanguard study, men have average account balances that are 50% higher than that of women’s. In the study, the differences were significant at high-income levels, which is attributed to men being paid higher wages for a longer period of time than women.
There is some good news. Atlantic published a 2015 survey by Fidelity reflecting that women earning less than $150,000 have more saved for retirement than men of comparable income.
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Investing
When it comes to investing, men tend to have more confidence, which may suggest why they save more than women, who tend to be more cautious. According to a 2019 survey on behaviors of men and women and their finances, Money Crashers noted some specific differences regarding investing:
Men not only show an enjoyment of but are also more interested in investing their own money. Younger women take a more active interest in managing their own assets than older women.
Men tend to have better knowledge of investing, most likely due to the fact that they are interested in investing.
Men tend to be more confident than women with money. This is especially true when it comes to single women. According to Fidelity, men are the most likely to state that they are knowledgeable in investing, saving for retirement or general financial planning — more than any other age group or gender.
Women seek help more often than men. This is good, as it can lead to a successful investment plan. Also, women tend to do more research and tend to be more careful than men. Women also generally have a long-term focus, while men view investing more as a competitive activity.
Women trade less often. This is important, as it keeps costs down. Also, short-term performance is not a primary focus for women, which means they are less impulsive than men; they tend to buy and hold.
Men take more risks. A study by BlackRock survey found that women overall have a lower tolerance for risk. Twenty-two percent of women say they are willing to take more risk for more return versus 41% of men.
Women experience slightly better investment returns. This is due to men taking higher risk which can lead to bigger losses. Women experience smaller losses as they generally don’t take the same level of risk as their male counterparts.
In the end, we all need to understand the importance of accumulating assets for retirement. The best approach is to save as much as you are able, especially in your 401k plan, and invest according to both your time horizon as well your comfort with risk. Take advantage of investment education provided by your employer, as it can prove to be one of the best sources for making sound savings and investment decisions. Over longer periods of time, establishing an appropriate mix of stocks to bonds and staying with it produces successful results.
Sources: Money Crashers (July 2019), The Atlantic (November 2015)
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Marijoyce Ryan, CPP, is vice president of fiduciary services for Karpus Investment Management, a local independent, registered investment advisor managing assets for individuals, corporations, non-profits and trustees. Offices are located at 183 Sully’s Trail, Pittsford, NY 14534 (585-586-4680).
