Women’s Financial Outlook Improves

Apr 1, 2016 | Uncategorized

Half Are Positive About Their Financial Futures, Up From 46 Percent a Year Ago

By Lee Barney, editor at www.plansponsor.com

American women are feeling more optimistic about their financial futures and more confident about their money-related decisions, according the BlackRock’s latest Global Investor Pulse survey.

Just over half, 51 percent, feel positive about their financial futures, up from 46 percent a year ago. Forty-two percent are confident they are making the right savings and investment decisions, up from 34 percent a year ago.

Both women and men believe that saving for retirement should be a high priority, yet only 55 percent of women and 65 percent of men are actually saving for retirement. Perhaps as a result, 75 percent of women and 68 percent of men are concerned about their ability to meet their retirement goals.

“It’s clear that women need to become much more active in managing their money toward urgent long-term goals, particularly retirement,” says Heather Pelant, head of personal investing at BlackRock. “But our survey also indicates that women have some key positive financial instincts that can lend valuable support to their saving and investing efforts.”

As to how much annual income they would like to live on in retirement, the goals are similar for men ($45,956) and women ($45,018). The stark reality, however, is that women between the ages of 55 and 65 have accumulated an average $118,000 in savings, which would provide an average of $7,782 in annual retirement income, according to the BlackRock CoRI Index 2015. Men in that age group have an average $162,000 in savings, which would generate an average annual income of $10,807.

Not surprisingly, then, 36 percent of men and 52 percent of women said they were concerned that they might not achieve their desired retirement income goal.

Women’s and Men’s Approach to Finances

Women tend to emphasize the day-to-day health of their household’s finances and paying off debt, while men are more focused on investments. Sixty-one percent of women follow a household budget and 55 percent are focused on paying off debt, but only 23 percent regularly review the performance of their savings and investments. On the other hand, 33 percent of men regularly review their investments, and 46 percent concentrate on paying down debt.

Men also put a greater priority than women on growing their wealth (35 percent versus 28 percent, respectively), holding on to their wealth (26 percent versus 20 percent), considering themselves an investor (40 percent versus 22 percent) and having less of their portfolio in cash (60 percent versus 71 percent). Men are also more likely to say that they enjoy managing their investments (46 percent versus 26 percent). When asked how the idea of investing makes them feel, men are more likely to associate words like “hopeful” and “optimistic,” while women most associated words like “nervous” and “risky.”

When women make growing wealth a priority, 63 percent have investments, versus 28 percent who do not have this as a priority, and they are twice as likely to regularly save and invest.

Women are more highly attuned to risk than men and are more cautious about the stock market. They are also more likely to ask for advice with regard to their investments (64 percent versus 55 percent) and to value professional advice (74 percent versus 64 percent).

“Overall, in deploying their money, women are more focused on managing risks to their financial security and stability over the short term, and men are more focused on achieving long-term money goals,” Pelant says. “In fact, men and women have a lot to learn from one another, as good financial and investment planning needs to reflect both objectives.”

Millennial Women

Thirty percent of Millennial women, those between the ages of 25 and 34, enjoy managing investments, compared to 21 percent of Boomer women, those age 51 to 69. Thirty-seven percent of Millennial women have prioritized growing wealth, compared to 22 percent of Boomer women.

However, when it comes to saving for retirement, only 53 percent of Millennial women are doing so, compared to 71 percent of Millennial men. They are also considerably less likely than their male peers to feel knowledgeable about investing.

Only 35 percent of Millennial women use the Internet for information on long-term financial decisions, compared to 43 percent of Millennial men, and only 45 percent of Millennial women are interested in robo-advisers, compared to 72 percent of Millennial men. That said, a mere 23 percent of Boomer women are curious about robo-advisers.

“For many investors, technology is playing an increasingly meaningful role in their decision-making, either supplementing the advice of a human advisers or representing a primary source of support,” Pelant says. “It’s encouraging that younger women are attuned to the potential benefits of technology because, as with many financial habits, becoming comfortable with the role of digitally delivered guidance early on can yield benefits throughout one’s investing life.”

BlackRock’s survey is based on the responses from 30,500 people in 20 nations, including 4,000 Americans.

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