More Confident, Women Still Not Planning for Retirement

Prudential’s study, “Financial Experience and Behaviors Among Women,” found women’s concerns about protecting investments from volatility have shrunk, from 94% in 2010, to 74% today, when it was at an all-time high. “Now it’s coming back to prerecession levels,” said Lori Dickerson Fouche, chief executive officer of Prudential Group Insurance at a panel discussion in New York about the survey.

The rebounding economy plays a part in women’s confidence and their expectations, said Lynnette Khalfani-Cox, a personal finance expert, CEO and co-founder of The Money Coach. Even from two years ago, the Dow Jones shows huge gains—a boon for anyone patient and smart enough to stay invested, she said.

Positive economic indicators align with an uptick in women’s confidence, Khalfani-Cox said, pointing out that two years ago the Supreme Court upheld the Affordable Care Act. “Women care a lot about health care issues and the costs surrounding health care,” she noted, calling it another factor helping boost women’s confidence in the economy.

“There’s less urgency today,” Fouche said. “Women are assigning less importance to some of the long-term goals that they were more concerned about in 2010 when the crisis was still front and center.”

The survey also found concerns about having enough money to maintain one’s lifestyle in retirement have shown a slight dip, to 93%, Fouche said. In 2010’s survey that concern was noted by 97% of respondents. Clearly, since the height of the recession in 2010, things have settled down, panelists agreed.

But drilling down into the data revealed some issues. “Despite feeling more financially secure, women don’t seem to be any more prepared,” Fouche said. Though the financial crisis is receding, women do not feel any better prepared to make wise financial decisions. Over a 10-year span, from 2004 to 2014, the percentage of women who feel very well prepared has shown no improvement, from 21% in 2004 to 20% now, Fouche said.

Jean C. Setzfand, vice president of financial security at AARP, said the results are an interesting mixture, and many factors come into play. Women do live longer, and they may not work as many years as men. “It’s really essential for women to pay attention to money matters,” she said. One highlight of the results is that women are more engaged in financial planning (27% versus 19% in the 2012 survey).

Despite the uptick in financial responsibility, women surveyed were actually less likely to seek financial help in the wake of the financial crisis, even as more women take responsibility for managing household wealth. Single women have almost always assumed primary responsibility for overseeing their own finances. But this year’s survey found 27% of married women saying they “take control” of financial and retirement planning, and do it themselves, up from 14% in 2006.

Unfortunately, Setzfand said, many feel retirement is not even within their grasp, but she urges financial services professionals to help them find a way to bring the future into the present day, to build that bridge.

Factors that could impede women’s use of financial professionals include money, time and trust. “That’s a big issue,” Setzfand said. The industry must make sure women can count on trustworthiness in the advisers they choose. “Are we disclosing fees very clearly for the services they are paying for?” she asked.

Women have clear advice for financial services firms that would like to help them achieve their long-term financial goals. Simplify the process, they say. Stop using so much financial jargon, look out for the customer’s interests and adhere to a strong code of ethics.

The panelists pointed to a tension between future goals and current pressures that can leave women feeling stressed and unsure. “What we see right in front of us is what we have to manage today,” Fouche said.

“People think about money second—life has to come first,” Setzfand said. People have a hard time wrapping their heads around the long term perspective, and it’s up to financial professionals to help make that tangible so that people can better plan for it.

“How do we bring the future more into the present?” Setzfand asks. “If people can try to envision what their future life looks like, they have a better shot at planning.”

Other findings of the survey include:

• Women feel more confident about their ability to manage day-to-day household finances, with nearly one-third giving themselves an “A” for their knowledge of managing money (33%) and managing debt (29%);
• Only 33% of women feel they are on track or ahead of schedule in planning for retirement, down from 46% in 2008; and
• Two-thirds of women (66%) say it’s very important to keep pace with rising health care costs, but only 9% are confident they will be able to.

Prudential’s eighth biennial study “Financial Experience & Behaviors Among Women” polled 1,407 American women and 606 American men between the ages of 25 and 68, from April 2 to 14. The report can be accessed at Prudential’s site.