I’ve been thinking a lot in recent years about how to get my retirement ducks in a row, but I hate to admit it: I’ve been doing a lot more thinking than doing.
It turns out that this is a common mistake women investors make. While we generally outlive men and understand the importance of saving for retirement, we’re not on par with men in terms of saving for our golden years.
This gap – which I’m calling the retirement gender-gap – is evident in just released findings of BlackRock’s first-ever Global Investor Pulse Survey, a survey of 17,500 respondents globally, including 4,000 Americans.
According to the survey results, retirement saving is a key differentiator between women and men globally, including here in the United States. For instance, men and women in the United States are aligned in prioritizing retirement: 47% of men and 46% of women name “funding a comfortable retirement” as a currently important financial priority. Yet just 53% of women in the United States say they have begun to save for their retirement, compared with 62% of men. So what’s behind this gap? Three interrelated factors may be at play.
Women tend to be less confident than men. These confidence issues may be keeping women back when it comes to saving for retirement. As my colleague Nelli Oster has pointed out so eloquently in her Men vs. Women series, behavioral finance researchers have found that women tend to be much less confident than men when it comes to investing. Such investing insecurity can cause investment decision inertia and may be holding women back from making retirement moves. For example, as women tend to be less confident and more cautious investors than men, they typically do more research, and take more time, before implementing an investment strategy.
Findings from the BlackRock survey back this up. According to survey results, while 55% of American men affirm that they understand how much they need to save for retirement, only 45% of American women do. Meanwhile, only 41% of U.S. women identify themselves as knowledgeable about saving and investing, compared with 57% of U.S. men.
Women tend to be more risk averse than men. Possibly because they’re less confident in their investing abilities, women tend to be much cautious investors than men. Their wary stance toward taking risk is evident in these survey stats: 55% of women globally (compared with 47% of men) agree that “I am not willing to take any risks with my money,” and just 22% of women globally (compared with 34% of men) say they are willing to take on higher risks to achieve higher rewards. This greater risk aversion could be what’s keeping women from building up their retirement accounts.