The State of Women and Investing

There is no shortage of statistical and anecdotal evidence to support the claim that income gaps and work-related disparities translate into lower lifetime earnings for women, meaning that over a 40-year career, women can lose $400,000 based on the gender wage gap alone.

That number increases to nearly $1 million for Black women and more than $1.1 million for Hispanic women, research shows. Because the primary sources of retirement income are based on employment earnings, being paid less than men means that women in the U.S. have fewer resources to save for retirement, including lower Social Security and pension benefits.

Increasingly, firms in the retirement planning space are taking steps to help close the gap, conducting targeted research and leveraging community resources to draw attention to the problem.

Sizing Up the Retirement Gap

Bank of America recently released new research on women and financial wellness, finding that 94% of women believe they will be personally responsible for their finances at some point in their adult life.

Despite this, about half of women (48%) feel confident about their finances, and only 28% feel empowered to take action.

The study, “Women, Money, Confidence: A Lifelong Relationship,” gauged how women rate their financial health. A majority of women responding to the underlying survey reported they are doing well managing their day-to-day finances. More than two-thirds reported success paying their bills every month (70%) and following a budget (53%). However, many said they are struggling with longer term actions, such as paying down debt (44%), saving for emergencies (44%), saving for retirement (36%) and building wealth (27%).

One in five women (21%) acknowledged that it is time to make a change to their finances.

Based on a nationwide survey of more than 3,500 women and 1,200 men, the report examines the progress women are making on their financial journeys and where they might need additional guidance and support.

Investing: A Source of Regret

According to the study, women are confident managing everyday financial tasks, such as paying bills (92%) and managing a budget (87%). On the other hand, only about half are confident managing investments (53%) and creating a diversified portfolio (44%).

While women and men have nearly equal influence on day-to-day financial decisions, such as paying bills and determining the household budget, less than half of women feel they have influence when it comes to decisions on investments (46% versus 64%), the study says. The top obstacles women cited as holding them back from investing include not having savings to invest (38%), a lack of knowledge (32%) and believing investing is too risky (22%).

When asked about their financial regrets, nearly half of women (44%) pointed to not saving and investing sooner, the study says. Women also say they would have invested more of their money (26%), educated themselves more about money matters (23%), not taken on as much credit card debt (21%), chosen a career with higher pay (19%), lived within their means (18%) and taken better care of their health (14%).

Bridging the Gender Investing Gap

According to related research from American Century Investments, women have roughly 80% of the retirement income of men and earn only 60% as much in a lifetime. This is despite women outliving men by a substantial margin, on average. Another challenge is that caregiving responsibilities disproportionately fall on women, negatively affecting their earnings, promotions and savings. 

In addition to mobilizing organizations like the National Women’s Soccer League team Kansas City Current to highlight the problem, American Century says it is empowering women to making progress toward closing their own investing gap through personalized insights and resources, according to a company press release.

The release also notes that American Century’s campaign features investing insights from women in the investment industry. “Quarterly Office Talks” are hosted by Elaine Bourke, vice president and client portfolio manager. Event attendees who make a pledge to “make their investing move” will gain access to personalized content, workshops and networking opportunities over the coming months, according to the firm.

American Century is not the only firm looking to sports to raise awareness, as TIAA has announced it is working alongside top athletes to spotlight the reality that women face in retirement.

Specifically, TIAA has announced a collaboration with University of Connecticut Huskies Guard Azzi Fudd, the top-ranked basketball recruit in 2021, and Curry Brand, Stephen Curry’s apparel and footwear line produced by Under Armour, according to a company press release. They have collaborated to debut nine “one-of-a-kind, hand-painted #RetireInequality sneakers,” with all sales proceeds benefiting The Equity Project, powered by the Women’s Sports Foundation.

“We launched the #RetireInequality campaign during March Madness this year to celebrate the advances made and to raise awareness of gender wage and retirement gaps,” said Stephen Tisdalle, TIAA’s chief brand and demand generation officer, in the release. “The collaboration with these all-star athletes and designers further helps tell that story in an effort to advance the pace of progress for women and society overall.”