It’s retirement survey season. Since the Reuters personal finance team began tracking research on personal finance topics at the start of the year, more than 20 studies have hit our inboxes. Some common themes are starting to emerge: investors are risk-adverse; women are too conservative when it comes to retirement savings; and Americans are financially stressed, so much so that they are even lying to their spouses.
Following a study released last December, the latest installment of retirement research from Wells Fargo focuses on middle-class women. The survey, conducted by Harris Interactive last fall and released on Feb. 2, queried middle-class women across five decades, from those in their mid-20s to those who are already retired and in their 60s. Just 54% of women say they are confident they will have enough saved to “live the life they want” in retirement. By contrast, 62% of men are confident about their retirement goals.
What is most surprising about this study? Women are a lot closer to parity in the professional and business world. We represent almost 50% of the workforce and have a greater standing in professional jobs. Plus, 35% of women in the workforce are college graduates. And three out of five college students are women. But we are definitely two steps back and one step to the left of men when it comes to retirement.
In our study, women estimate they need for $200,000 for retirement, while men say they need $400,000. There’s already a problem because women are going to live longer. This isn’t part of our study, but 75% of nursing home residents today are women. Women get a smaller percentage of Social Security benefits than men. They are already behind in terms of guaranteed income. They are underestimating what they need in retirement.
What is shocking about the research? When you look at women aged 40 to 69 –- these are women who should be starting to think about retirement; retirement is knocking at their door; or they are in retirement –- 30% said they couldn’t estimate how much they will need to withdrawal from retirement savings annually. They either hadn’t thought about it or didn’t know. That’s head-in-the-sand behavior.
When we looked at women in their 40s and 50s, and asked them how much they need to take out when they retire, 32% said they planned to withdrawal 11% to more than 30% of their retirement savings every year.
What about married couples? We asked married women in particular: Are you the primary decision maker in your house? 83% described themselves as a joint decision maker with their spouse. You’d like to think the answers from men would be similar, but only 50% think they are a joint decision maker.
What about investing? Women are much more conservative, which echoes a lot of other research I have seen: 27% of women versus 40% of men are confident in the stock market. When asked if they were given $5,000 for retirement today, 40% of women said they would put it in a bank certificate of deposit. You know what those pay. That’s as bad as taking out 11% to 33% from a retirement account each year. That’s not going to move the needle.
Women in their 20s are most conservative around investing: 46% said they would put $5,000 for retirement into a bank CD. They are starting off their careers investing like 80-year-olds. And I can understand why. They’ve seen the banks melt down. They have seen what their parents have gone through.
What if, anything, is positive? Women, more so than men, want help. They value advice. They are more interested in employers providing investment guidance. More than 80% of respondents said: “My employer should help me.”
What are you doing to help your female customers? This week we are launching Beyond Today, a women’s retirement website. It is targeted at the affluent segment rather than the mass market. We do offer a number of tools on our main Wells Fargo site targeted toward retirement. We are also working with Jean Chatzky and More Magazine to provide advice and guidance to women. Hopefully, we will have a good dialogue.
What else does Wells Fargo offer that is unique within the retirement space? We force couples to sit down and talk about their retirement plans. And it is a difficult conversation. My husband and I had to walk away three times because it got so intense. We have always shared accounts, bills, and the day-to-day stuff. But it turns out I want to travel more each year, and he plans to leave more money to our children. I plan to stop working someday. He will die with his boots on.