Data & Research November 20, 2014

‘The Number’ for Affluent Women Is $2M

They are saving more; they credit the stock market with much of their wealth; and some (29%) still worry about running out of money in retirement.
Reported by

The financial crisis affected even affluent women: it made them save more, according to a survey from Wells Fargo. A strong majority (93%) of affluent women “enjoy making and accumulating money” and more than half (53%) believe that money helps buy happiness, the survey shows. Women have a strong sense of pride in earning money, with 85% of them saying they feel proud about their earning power.

Affluent women are well-positioned for retirement, the survey found. While the financial crisis did not affect the financial well-being for a majority of affluent women (57%), it did impact their savings behavior. More than half (54%) say it made them “more aggressive about saving money.” Only 48% of non-retired affluent women have an annual savings goal, and the median annual goal is $20,000. Non-retirees have saved a median of $600,000 and have a median goal of $1 million. They plan to retire at the average age of 64. While three out of four affluent women agree that they need at least $1 million to “feel wealthy,” 42% feel they would need $2 million or more.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

“It’s crucial to have a savings goal so you know if you are on track. These women have the means and are disciplined savers, but having a financial plan with an investment strategy can put them on an even better path,” says Karen Wimbish, director of retail retirement at Wells Fargo.

The affluent women surveyed exude confidence about having enough money. Four out of five (82%) non-retirees feel confident they will have enough money to live the kind of retirement they want. Nearly all (95%) retired affluent women feel they will have enough money in retirement.

Seventy-two percent of non-retirees value their assets and wealth more for the lifestyle and security it will afford them in retirement than the lifestyle and security it gives them right now (28%). The top three things that scare affluent women about retirement are: losing their health (55%), losing their mental abilities (52%) and running out of money (29%).

Defining Success

In defining a successful retirement, more than half of affluent women feel it is having enough money for their preferred lifestyle (55%), with other top choices including being healthy (23%) or spending time with family and friends (13%). When non-retirees think about their future in retirement, they look forward to spending more time with family (64%), focusing on physical fitness (63%) and becoming more charitable with their time (58%).

While it is hard to imagine what life will be in retirement, half of non-retirees (52%) anticipate their expectations and goals will change once they retire. Fifty-eight percent of retired affluent women say they did not have a realistic picture of what life in retirement would be like until they were in their 60s and beyond. And 43% of retired women say their retirement years are different from what they imagined.

Affluent women are taking the lead in managing their daily finances, with 82% percent managing the household budget and purchase decisions, 79% managing the household cash flow and 75% paying the bills. But only 46% of these women are taking primary responsibility for choosing and managing investment accounts, and this rate falls to 34% among married women. Affluent women in their 40s buck this trend, with more than half (56%) choosing and managing investment accounts.

As their wealth has increased, 43% of affluent women say they have become more competent at handling investments, while 53% stayed the same and 4% became less competent. Along similar lines, a minority of these women (36%) say they have become more involved in financial decision making, while a majority (58%) say their involvement in financial decision making has stayed the same and 6% became less involved.

Wimbish says she doesn’t think she’s come across a study where women so overwhelming express joy at earning money and pride in their capacity to do so. “They credit the stock market for increasing their wealth,” she says. “However, we see fewer women managing their investments, although that is changing. The good news is, more younger women in the workplace are taking on the role of investing for their households. If you are making money and you think the market is helping your money to grow, then it makes sense to be more directly involved in investment decisions.”

Giving the Stock Market Its Due

While a majority of affluent women (94%) feel they’ve worked hard to create their wealth, 68% acknowledge that most of their wealth has been generated by investments and growth in the stock market. More than three-quarters (78%) feel the stock market is the best way to grow savings over the long term. In fact, nearly two-thirds (64%) of affluent women say it’s more exciting to watch assets grow through good investments in the stock market versus watching it grow by earning and saving (36%).

Given the stock market’s growth over the last five years, 37% of affluent women say they are “more eager to put money into the market right now,” while 23% are “more reluctant to put money in the stock market now” and 40% admit they “don’t pay much attention to the stock market.” Interestingly, nearly three-quarters (73%) disagree that the stock market is too risky for them while 27% agree. But this is tempered with the more than half of women (54%) worried about losing money in the stock market.

“Life in retirement is hard to imagine until you are actually living in it,” Wimbish says. “Having the fortitude to have a financial plan with realistic goals for saving and investing will allow you to recalibrate your retirement dreams when the time comes.”

Versta Research conducted the survey of 1,872 affluent women in the U.S., ages 40 to 79 with at least $250,000 in household investable assets, between September 3 and September 15, to examine their perspectives on wealth, investing, work and retirement. All were working women either currently or for at least 15 years before leaving the workforce.

Data & Research November 20, 2014

Efforts Needed to Address Women’s Retirement Readiness Obstacles

Women’s path to a financially secure retirement is filled with many obstacles, a global survey shows.
Reported by

In a webcast about a new report from Aegon UK and the Transamerica Center for Retirement Studies, Catherine Collinson, president of the Transamerica Center for Retirement Studies, said a survey of more than 16,000 people in 15 countries revealed that women’s positive retirement aspirations are undermined by lifestyle differences. Women are more likely to take time out of workforce or work part-time to take care of family, and they tend to have lower salaries. “These things affect lifetime savings and long-term retirement readiness, especially since women tend to live longer than men,” Collinson said.

The study shows women are more than twice as likely as men to be working in part-time jobs–jobs that often provide few, if any, retirement plan benefits. In addition, women, on average, earn about 27% less than men.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

On average globally, women envision entering full retirement at the age of 62. But, there are big variations among countries. In the United States, women expect to retire around the age of 66. Overall, women expect they’ll need an average of 71% of their working-age incomes after they retire; in the U.S., the figure is 67%. Collinson says these findings are somewhat shaped by national policies in each country.

Asked what words they associate most with retirement, survey respondents used positive words most often, such as “leisure” (45%) and “freedom” (39%). However, one-quarter (24%) of women associated retirement with “insecurity” and almost one-fifth (18%) with “poverty.”

Only 20% of women overall feel they are on course with saving for a secure retirement, but twice this number (40%) simply do not know whether they are on course or not. In the U.S., 24% of women feel they are on course, and 43% do not know.

According to the survey, women generally feel responsible for their own retirement income, are aware of the need to plan financially for their retirement and understand retirement planning matters. However, this does not often enough lead to action in the form of planning and saving. Only 10% of women say they feel “very prepared” for retirement and are confident they are already saving enough. Higher income earners, those with a greater understanding of financial matters, and those with more developed planning skills are most likely to belong to this group. More than twice as many women (23%) say the opposite: they feel “very unprepared” and are hardly saving at all. In the U.S., 12% say they are saving enough, and 23% say they are hardly saving at all.

Overall, more than one-third of women (36%) claim to be dedicated savers whose approach is always to make sure they are saving for retirement (which is not necessarily the same as “saving enough”). These women tend to be older with an understanding of financial matters and highly developed financial planning skills. The majority of women, however, do not fall into this group. Younger women, for example, are more likely to be “occasional savers” or to belong to the 24% of women who are “not currently saving although intend to."  In the U.S., 16% say they only save occasionally; 15% are not saving, but intend to; and 15% are not saving, but have in the past.

For two-thirds (67%) of women, a lack of money to invest is a major obstacle to saving for retirement. The survey found women feel dependent on their spouse’s or partner’s income in later life. More than half (54%) of women who are married or living with a partners say that their spouse/partner will be “very” or “extremely” important as a source of financial support during retirement. Further, only 12% of women say that they do not expect their spouse to be an important source of retirement income.

Overall, 38% of women fear they won’t have enough savings for retirement (compared with 30% of men). Women are also less optimistic when it comes to medical expenses—36% believe they will be able cover medical costs in retirement, compared to 43% of men.

Increasing access to workplace retirement plans and a more flexible retirement is the way forward, the report recommends. Collinson said 38% of women versus 45% of men said their employers provide access to a workplace retirement plan.

The survey shows that 74% of women agree that governments should encourage employers to automatically enroll all their employees into a retirement plan. Only 6% of women disagree. Overall, 62% of women say automatic enrollment is “very or somewhat appealing.”

In addition, the survey found only a minority of women (29%) expect to stop work immediately at retirement. In the U.S., it’s only 17%. A clear majority now expect to have some form of phased transition into retirement.

Collinson noted that the main reasons women give for working longer are not financial, but because they enjoy their work and want to remain active.

According to Angela Seymour-Jackson, managing director, Workplace Savings, Aegon UK, the report includes recommendations for efforts to improve women’s retirement readiness. In addition to implementing automatic enrollment in their workplace retirement plans, employers can implement automatic escalation features. The report also recommends plan sponsors extend, where necessary, workplace retirement plans to cover part-time workers thereby providing more employees, particularly women, the ability to save for retirement.

The report recommends both government and employer policies to improve retirement incomes for women while facilitating a more flexible workforce aligned with the unique needs of women:

  • Provide for equal maternity and paternity leave, making it easier for men to share in caregiving responsibilities;
  • Provide assistance and information about caregiving services;
  • Provide Social Security or government “credits” for unpaid time spent by individuals in caregiving roles;
  • Expand the entitlement age range for receipt of government retirement benefits in all countries to reflect increasing longevity and workers’ preferences for a phased transition into retirement;
  • Encourage the implementation of age-friendly workplace policies in recognition of the potential contribution of employees at all ages and the value of a multi-generational workforce;
  • Provide vocational training opportunities and support to help women remain economically active longer into their retirement; and
  • Encourage the implementation of phased workplace retirement programs, which enable workers to stay in the workforce and transition gradually to retirement.

The report says efforts should be made to facilitate the offering of investment advice inside the workplace, particularly in the context of workplace retirement plans. In addition, efforts should be made to encourage the role of investment advisers in providing personalized retirement strategies both inside and outside the workplace. Finally, the report recommends stepping up financial literacy courses in schools and workplaces

The financial industry and plan sponsors could do better at targeting and educating women, Seymour-Jackson said. Financial education should include household budgeting as well as long-term savings, she suggested. And, she said, education should be simple and engaging and available through digital devices.

The report, “The Changing Face of Retirement Women: balancing family, career & financial security,” can be downloaded from the Transamerica Center for Retirement Studies website or the Aegon website.

«