Women Will Heed Financial Advice

A new study from Massachusetts Mutual Life Insurance Co. suggests that women express a greater openness to financial education and to getting professional financial advice than do men.

According to the white paper “Closing the Retirement Gender Gap,” which analyzes findings from the firm’s “Women’s Retirement Risk Study,” financial advisers are in a strong position to help women avoid the prospect of poverty in old age.

“The difficulty that many women face in preparing for retirement leads many to anticipate living less comfortably and running out of money five years too soon—a stunning development from a retirement planning perspective,” says Teresa Hassara, head of MassMutual’s Workplace Solutions.

According to MassMutual, on average, women retirees and pre-retirees expect to spend 25 years post-employment, compared with men, who expect to spend 23. However, women believe their savings will last only 20 years, compared with men, who think their savings will last 25.

On average, the data show, retired women anticipate living 30 years in retirement, while pre-retiree women anticipate only 21.

The MassMutual study notes several reasons for why women expect a more difficult time financially than do men. These include being less confident about managing savings and investments, being uncertain about optimizing Social Security, feeling a need to replace a higher percentage of their pre-retirement income, and being more concerned about taking investment risk.

As Hassara points out, there are many obstacles that make it more challenging for women to prepare to retire. She calls this “a reality we need to overcome if women are to enjoy a secure retirement.

“MassMutual’s study shows that many women are less comfortable with financial issues and money in general,” she adds, “so it’s critical for them to have access to more education, professional financial advice, planning tools and other resources to meet these challenges head on.”

Only about a third of both men and women said they will need to replace at least 75% of their pre-retirement income when they retire—despite the fact that financial advisers generally push for income replacement rates between 70% and 80%. Forty-one percent of men and 45% of women think they need to replace only 50% or less of their income for retirement.