Women and Financial Wellness: Beyond the Bottom Line
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Longer Lives, Smaller Nest Eggs
Women are living longer than ever before. And, over the past several decades, women have experienced a seismic shift as they’ve seen dramatic gains in personal and financial power. Yet there is still a trail left to blaze. While women live longer lives than men, they also have less wealth to fund their longer lives.
- By age 85, women outnumber men two to one and 81% of centenarians are women.
- 64% of women say they’d like to live to 100, yet most fear they’d run out of money. In fact, 42% of women are afraid they’ll run out of money by age 80.
- While a typical retirement costs $738,000, only 9% of American women have at least $300,000 saved.
The Life Journey Through the Gender Lens
We know one size does not fit all. Throughout our research, we aim to represent the voices of many women at different places in their life journeys: early adults, parents, retirees, caregivers, and more. Capturing women at different points in their lives emphasizes that life is not static. Financial priorities change throughout people’s lives, including in response to changes in relationships, education, employment, family responsibilities and other key differentiators.
- 70% of women say that women and men have fundamentally different lives yet financial planning models have defaulted to men’s salaries, career paths, family roles, lifespans and preferences.
- Women spend 48% of their adult lives outside of the workforce vs. only 28% for men, including time spent in retirement and caring for children, aging parents and spouses.
From the Pay Gap to the Wealth Gap
While the pay gap is well covered, the wealth gap is less well known. The pay gap is often considered at one moment in time, yet that misses out on interruptions a woman may take to account for her life journey. We look at the cumulative pay gap over a lifetime and how that feeds into the wealth gap, which is fueled by women’s lack of access to wealth building tools, for example employer benefits and pre-tax savings opportunities.
- Women already face a pay gap — and that casts a long shadow forward across women’s lives. By retirement age, a woman taking typical time out of the workforce will accumulate $1,055,000 LESS than a typical man.
- Closing the pay gap won’t address the even bigger wealth gap: The average single woman has three times less wealth than the average single man.
- Part of what fuels the wealth gap is women’s lower access to wealth escalators, benefits that help to grow one’s money faster than income alone, e.g. investing opportunities, 401(k)s, 529s, Health Savings Accounts, and more.
The Taboo of Money Talk
While there’s a lot media coverage and public discussion about women, one topic flying that warrants more attention is financial wellness. Women say talking about money is a strong social taboo.
- 61% of women would rather talk about their own death than about money.
- Women’s media is not helping: Of 1594 pages of editorial in March 2018 issues of the top 17 women’s magazines, less than 1% were about personal finances.
- Women say their top barrier is education: 87% of women say basic financial education should be part of the high school curriculum.
The Road to Financial Wellness
Women’s longevity, compounded by the gap and wealth gaps, makes it even more critical for women to take the necessary steps towards achieving financial wellness. While women already feel confident in most financial tasks—as confident as men—there is one missing piece: investing.
- Women are equally confident to men in most financial tasks EXCEPT for investing. Only half of women say they feel confident in managing their investments.
- Women’s top financial regret is not having invested more of their money
- 65% of women say they want to invest in causes that matter to them
Beyond the Bottom Line: Linking Money to Values, Goals and Priorities
Women care about performance, but they also see money as a way to finance the life they want to live—to meet their commitments to themselves and the people and issues they care about.
- 84% of women say that understanding their finances is a key to greater career flexibility
- 77% of women say they see money in terms of what it can do for their families
- 52% of women investors are interested in or currently engaged in impact investing, generating returns along with social returns
Funding Their Journey
Committed to seeing women clients through customized financial solutions that consider their individual life journeys, wants and needs, Age Wave and Merrill Lynch produced Women & Financial Wellness: Beyond the Bottom Line, conducted in partnership with Bank of America Merrill Lynch. The study surveys more than 2,000 women and 1,000 men on their financial needs, preferences, priorities and challenges.
For the full study, please visit www.ml.com/women.