A Profound Opportunity for Advisers

A new survey report notes that women control a third of total U.S. household financial assets today—more than $10 trillion—and as much as $30 trillion more is expected to shift into the hands of U.S. women over the next five years.

The Alliance for Lifetime Income and HerMoney have published new research findings based on a survey taken in March 2022, compiling the responses of more than 1,000 women who are members of the HerMoney community.

As detailed on the group’s website, HerMoney is a digital media organization focused on improving the relationships women have with money. Their stated mission is to level the playing field for financial security, confidence and power. According to the group’s survey data, nearly three in four (73%) women know what steps to take to build their retirement nest egg. However, less than half (47%) feel like they know how to make their money last throughout retirement.

Jean Chatzky, an Alliance for Lifetime Income fellow and CEO of HerMoney, says these figures regarding income are “striking,” especially considering that the 401(k) plan system has been developing for more than 40 years.

“The vast majority of women in the HerMoney Community know how to accumulate enough money for retirement,” she says, “but they are still scratching their heads when it comes to making that money last.”

As Chatzky points out, this uncertainty has created a major point of concern. More than half (52%) of women rank running out of money as one of their top two concerns when it comes to retirement and retirement planning, including 46% of the highest earning women, or those with $200,000 or more in annual household income.

The good news, Chatzky says, is that nearly all women surveyed (91%) are making contributions to a 401(k), individual retirement account, 403(b) or other dedicated retirement investment vehicle. A majority (55%) are saving 15% or more of their income for retirement. Among women who have less than $100,000 in annual household income, retirement saving remains a clear financial priority, with 83% of this group making contributions and more than a third (36%) saving 15% or more of their income.

“The women we studied are almost solely focused on saving as the end-all be-all for retirement, when it’s equally important to build a retirement income plan that will make your money last,” Chatzky says. “It’s not surprising then that four in ten women say protected income—a pension or investment that provides a paycheck for the rest of their life—would alleviate their concerns about running out of money.”

Jean Statler, CEO of the Alliance for Lifetime Income, says it is essential for financial professionals to broaden their focus beyond the accumulation phase of the savings journey.

“I’m not at all surprised that women are saving more, but so many still don’t know how to make that money last for 20, 30 or more years in retirement,” Statler warns. “It’s critical that we change that, especially given today’s market volatility and uncertainty, by helping women shift their thinking to retirement income planning and consider protected income from an annuity to help ensure they never run out of money.”

As Chatzky and Statler note, protected income in the U.S. comes from three primary sources. These are Social Security, private pensions and annuities purchased by individuals. Most women surveyed do not associate protected income with an annuity; in fact, just 3% of women say purchasing an annuity is “extremely important” to securing their financial future.

HerMoney and ALI recommend that women seek out and work with trusted financial professionals who are knowledgeable on retirement income planning. As the research shows, the 44% of women who work with a financial professional are significantly more likely to know the steps to take to make their money last in retirement compared with those who don’t have an adviser.

“Women control a third of total U.S. household financial assets today—more than $10 trillion—and $30 trillion more is expected to shift into the hands of U.S. women over the next three to five years,” Statler says. “Any financial professional who isn’t thinking daily about how to better meet the wealth management and retirement income needs of American women simply isn’t paying attention. The economic strength of women in our country today is profound, but that doesn’t mean they don’t want advice.”