Women make financial strides

Women “are making positive changes to their finances and closing the gap with men across the generations,” notes the Gender Gap in Financial Wellness Report by Financial Finesse.

The survey particularly addresses millennial women and measures the earnings gap this cohort is expected to experience at some time due to caring for family members, having a child, or “pursuit of ‘passion jobs.’”

Survey results show that since 2012 women have progressed in their financial endeavors and demonstrate a 37% improvement since then.

Still, “While the gap is narrowing, part of the closure is due to men’s backsliding, a troubling trend that shouldn’t get lost in the efforts to increase women’s financial wellness.”

Important trends:

• Unique problems for women in retirement planning include longer life expectancy, bigger healthcare costs over time, lesser savings, and lower incomes;
• Growing knowledge of investments has helped women narrow the gap, but there’s still room for improvement;
• The gap in financial wellness closes with age;
• Women demonstrate financial acumen with topics like child and family care, college savings, estate planning, and insurance;
• The number of women taking loans from retirement plans has fallen by one-third; and
• Millennials are more apt than others to have emergency funds—“this gap grows with age.”

This week, an examination of financial circumstances and trends for women.

‘The only way not to think about money is to have a great deal of it.’ –Edith Wharton

Gallup says that “Millions of Women Worldwide Would Like to Join the Workforce.”  Women comprise half of the global population, yet “barely half of them today are participating in the workforce.”

This is contrary to what most people prefer—men and women. Seventy percent of women and 66% of men say they’d want women to have wage-earning jobs. That’s more than twice the number that believe women should not work.

Overall, 29% of women would choose to work, and 27% would stay home. Forty-one percent of women “would prefer to do both.”

Twenty-eight percent of men would like women to work, 29% want them to remain at home, and 38% would like them to do both.

Gallup says the report reveals existing difficulties between men and women everywhere on the globe. Still, men and women often share perspective on the importance of women in the workplace.

“Leveraging this common ground will be crucial in meeting the United Nations’ Sustainable Development Goal 8 of achieving productive employment and decent work for all women and men by 2030,” reports Gallup.

Clearly, women are important contributors to the economy, and are advancing in their understanding of finances.

In fact, “Women’s Wealth Growing Faster Than Men’s,” says Money. Research from Boston Consulting Group shows women manage $39.6 trillion—30% of wealth in the world. This is an increase over the 25% they controlled five years prior.

Women investors increased their holdings an average of 8% over the prior five years.

It is anticipated that by 2020, women’s wealth will have increased by 7%, and money under their control will equal $72.1 trillion per year.

Contributing to this circumstance is greater wealth acquisition by women through inheritances and divorce payments. Women are also finding success in business, running 36% of all businesses in 2012.

Further, women increasingly seek education and make up a greater share of college graduates.

“Women’s wealth is already growing at a faster rate than overall global rates—growing 6.6% over the last year, compared with global growth of 5.2%,” the article says.

In further examination of women and investing, The Huffington Post says women approach investing with “gender-linked qualities” that prove beneficial.

These traits are a calm approach, extensive research, and exercise of patience.

Men tend to have more confidence in investing, while women are goal-oriented and do less trading.

All of these habits are good in moderation, although research reveals over a seven-year time span, men traded 45% more than did women. This equates to a reduction in returns of 2.65% for men versus 1.72% for women.

“Patience…is quite a virtue on stock markets,” the article notes.

‘The two most beautiful words in the English language are ‘check enclosed.’’’—Dorothy Parker

“Do Women Call the Financial Shots in the Household?” asks USA Today. A survey by CreditCards.com shows men and women have a “stark disconnect” on how money is spent.

Of women, 73% say they were the party responsible for purchasing clothes and shoes; 23% of men concurred. In vacation planning, 41% of women say they make the decisions; 12% of men agree.

The survey shows women have more buying power, and “men have less of a say than they might think.”

According to Marianne Clyde, a marriage and family therapist, “Women make most of the financial, day-to-day decisions in a relationship. That’s neither a good nor bad thing. It’s kind of the way everyone’s wired.”

Problems enter in when partners fail to consider one another’s perspective, or when one of the two feels overwhelmed in planning expenditures.

It is suggested couples make ground rules and remain direct in their communications about money matters.

An article at CNBC says women face a “serious challenge” in retirement.

Statistics “point to women’s rising financial clout.” Forty-four percent are the main breadwinners, and 27% of married women indicate they “take control” of financial and retirement planning issues.

Forty-five percent of today’s millionaires in America are women, and women comprise 51% of workers in professional and technical fields.

Still, challenges persist. The pay gap is one, as women earned 80% of men’s wages in 2015. This yields lesser future Social Security benefits.

“In 2012, women over 65 received $12,520 in average Social Security income compared to $16,398 for men.”

Further, it’s not unusual for women to take a hiatus from work to care for kids, thus they cannot take full advantage of company retirement plans.

It is suggested advisors grow retirement planning offerings for women. Women will be best helped with assistance in:

• Organization and budgeting;
• Management of credit and debit;
• Tax-advantaged retirement planning;
• Identification of a financial team to help—public accountants and estate planning lawyers;
• Insurance; and
• Education savings plans.

Once women enter retirement, their financial risks are higher, notes a CUNA blog post.  Women tend to place needs of their family above their own financial security; one survey shows half of working women say retirement saving is a priority, compared to 62% of men.

This is important because as women have longer life expectancy, they will incur greater costs in retirement. For instance, a private room in a nursing home costs beyond $90,000 per year.

Women comprise 70% of the nursing home population and every year spend an additional $600 than men on health care.

Not only should women manage finances for retirement, but also take preventative measures to maintain overall wellness.

Women under 30 can take steps to set up comfortable finances when they follow five steps, per a CNN Money post.

When younger women eliminate high-interest debt, grow emergency savings, formulate goals to build financial plans, start a 401(k), and take advantage of investing opportunities they will be well on their way to achieving financial success.

Says Sallie Krawcheck, “one of the highest-ranking women on Wall Street,” women should begin by investing 1% of every paycheck.

“Pay yourself first,” she says.

LORA BRAY is a market intelligence analyst for CUNA’s economics and statistics department. Follow her on Twitter via @Bray_Lora and visit the CUNA blog, The Research Roundup: Economic Perspectives.