The wage gap between men and women is bound to affect how comfortably each can retire - but so is the planning gap.
Analysis of responses to a recent MoneyRates survey shows there is a gender gap when it comes to retirement-planning.
The differences are in how comfortable men and women are with retirement-planning concepts and how they pursue answers to their retirement questions.
There also appears to be a communication gap between men and women in relationships when it comes to how they perceive their process for making financial decisions.
Knowledge is power.
In order for men and women to have the same degree of control over their retirement security, they must have the same level of information and resources when it comes to retirement-planning.
This article identifies the gender gaps in retirement-planning and offers suggestions for how to close those gaps and start planning for retirement.
Answering Retirement-Planning Questions
Retirement-planning starts with asking some key questions:
- How much money will I need to live on in retirement?
- How can I save for retirement?
- What is a qualified retirement plan and how can I use one?
- How much should I save for retirement?
- When should I retire?
Of course, if you have a lot of time, you can research and gain the experience needed to answer each of these questions yourself.
People who lack the time, expertise or interest to do that research often choose to have a financial planner guide them through the process instead.
Either way, there are plenty of topics, products and services to explore. However you go about it, the important thing is to find the answers to your retirement questions.
You can start by familiarizing yourself with the options in the table below and then read on to learn about how men and women go about educating themselves and answering these questions.
About the Retirement-Planning Survey
The survey asked 500 women and 500 men a number of questions related to retirement-planning.
All those surveyed were either within 20 years of retirement age or had already reached retirement age. Therefore, all had reached a point in their lives where they should have dealt with retirement-planning to some degree.
The retirement-planning survey explored four main topics:
- Comfort with retirement-planning concepts
- Retirement-portfolio positions and sustainability
- Who is more likely to ask for help with retirement-planning?
- Is there a communication gap between men and women about retirement-planning?
Comfort with Retirement-Planning Concepts
Ever put off dealing with a subject because you didn't know very much about it? It's basically fear of the unknown, and that's the dynamic at play with retirement-planning.
Fear of the unknown is a strong barrier to good retirement-planning - so much so that it can become a vicious cycle:
- People are uncomfortable with retirement-planning because they don't understand it
- Yet that discomfort can also prevent them from learning more about the subject
1. Who is more comfortable with retirement-planning?
Most people responded that they felt familiar enough with retirement-planning to make good decisions, and the numbers were roughly equal as between men and women:
- 51.4% of women feel they're familiar enough with retirement-planning to make good decisions
- 52.6% of men feel they're familiar enough with retirement-planning to make good decisions
2. Who is unprepared to make retirement-planning decisions?
The gender gap showed up when it came to the extremes of those who felt unprepared to make retirement-planning decisions and those who felt their knowledge was well above average:
- 39.2% of women said they didn't know much about retirement-planning concepts
- 27.4% of men said they didn't know much about retirement-planning concepts
Given that the people surveyed were all aged 45 or older, these are large chunks of the population who don't have enough comfort with retirement-planning to make good decisions. The higher percentage of women who feel this way is of particular concern.
At the other end of the spectrum, men are roughly twice as likely as women to feel their retirement knowledge is well above average:
- 9.4% of female respondents believe their retirement knowledge is above average
- 20% of male respondents believe their retirement knowledge is above average
Of course, someone feeling they know a lot about retirement-planning doesn't necessarily mean they actually do. It may be that men are simply more likely to think they know it all and less likely to admit when they don't.
However, people who feel confident in their retirement-planning knowledge are more likely to tackle the process. The lower confidence level of women in this area could hurt them if it discourages them from getting started.
|How comfortable are you with retirement-planning concepts?||Women||Men|
|I think I'm familiar enough with retirement-planning to make good decisions||51.40%||52.60%|
|I don't know much about them at all||39.20%||27.40%|
|I feel my retirement knowledge is well above average||9.40%||20.00%|
Retirement-Portfolio Positions and Sustainability
Comfort with retirement-planning starts with having the information you need to make good decisions. Perhaps one reason why women overall are less confident than men about retirement-planning is that the survey shows women may be more likely than men to lack the information they need.
1. Who knew how much of their retirement investments were in stocks?
One of the survey questions asked people how much of their retirement investments were currently in stocks. Women were about twice as likely as men to say they didn't know:
- 25% of female respondents said they didn't know how much of their retirement money was currently in stocks
- 12.6% of male respondents said they didn't know how much of their retirement money was currently in stocks
(Note that the survey only asked this question in terms of broad percentages. People did not have to know exactly how much of their retirement investments were in stocks in order to respond.)
|How much of your retirement investments are currently in stocks?||Women||Men|
|I don't know||25.00%||12.60%|
|Less than 40%||22.80%||25.40%|
|40% to 60%||11.20%||17.20%|
|61% to 80%||6.00%||8.80%|
|More than 80%||3.60%||7.40%|
|None, I own other investments||31.40%||28.60%|
2. Who had calculated how many years their retirement savings would last at current spending rates?
Another basic question people struggled to answer was about how long their retirement savings would last.
- 26.6% of women said they have calculated how long their retirement savings would last at current spending rates
- 38.8% of men said they have calculated how long their retirement savings would last at current spending rates
|Have you calculated how many years your retirement savings would last at your current spending rate?||Women||Men|
The numbers show men have more information about their portfolio positions and how sustainable their current rate of spending is - but it's not exactly something about which to brag.
When it comes to conventional retirement investments, stocks represent both the greatest return potential and the greatest risk. There's too much at stake for people not to know how much of their retirement savings are in stocks.
In addition, a lot of key decisions rest on knowing how sustainable your retirement spending is. It can help you figure out how much to save for retirement, when to retire, and what your retirement budget should be.
This kind of calculation can be done with a retirement calculator. It is also the kind of thing a financial planner can help you understand.
Who is More Likely to Ask for Help with Retirement-Planning?
There is an old cliche that male drivers won't ask for directions, no matter how hopelessly they're lost. When it comes to retirement-planning, though, the survey suggests that men are more willing than women to ask for help.
1. Who has worked with a financial planner to develop a retirement plan?
A higher percentage of men than women said they had worked with a financial planner or other professional to develop a retirement plan:
- 27.4% of women have worked with a financial planner to develop a retirement plan
- 30.8% of men have worked with a financial planner to develop a retirement plan
|Have you worked with a financial planner or other professional to develop your retirement plan?||Women||Men|
|No, I do it myself||51.00%||53.60%|
|No, but I plan to within the next year||21.60%||15.60%|
The difference was more telling when focused on people who admitted they did not know much about retirement-planning concepts:
- 6.63% of women who said they don't know much about retirement-planning concepts said they had worked with a financial planner or other professional to develop a retirement plan
- 11.68% of men who said they don't know much about retirement-planning concepts said they had worked with a financial planner or other professional to develop a retirement plan
|How comfortable are you with retirement-planning concepts?||Have you worked with a financial planner or other professional to develop your retirement plan?||Women||Men|
|I don't know much about them at all||Yes||6.63%||11.68%|
|No, I do it myself||64.29%||64.96%|
|No, but I plan to within the next year||29.08%||23.36%|
|I think I'm familiar enough with retirement-planning to make good decisions||Yes||38.52%||35.36%|
|No, I do it myself||44.36%||48.67%|
|No, but I plan to within the next year||17.12%||15.97%|
|I feel my retirement knowledge is well above average||Yes||53.19%||45.00%|
|No, I do it myself||31.91%||51.00%|
|No, but I plan to within the next year||14.89%||4.00%|
In other words, men who don't know much about retirement-planning are more likely to get help with it than women.
The real problem, however, is that for both men and women, the people who seem to need the most help with retirement-planning are less likely to ask for it than people who are more knowledgeable about it.
The Communication Gap Between Men and Women
Among couples, retirement-planning is likely to have a profound effect on both partners for years to come. Both should participate in the process and be kept up to date on its progress.
1. How well people share an understanding of their retirement plan with their spouses
Men and women seem to have different opinions on how well they share an understanding of their retirement plan with their spouses:
- 64.09% of women said they shared a good understanding of their retirement plan with their spouse
- 77.6% of men said they shared a good understanding of their retirement plan with their spouse.
This suggests there may be less communication about the subject going on than men think there is.
|Do you and your spouse/significant other share a good understanding of your retirement plan?||Women||Men|
|No, because we disagree on it||2.35%||1.33%|
|No, because we haven't really discussed it||33.56%||21.01%|
2. What people believe about who makes financial decisions
Another example of this communication gap is that men and women with a spouse or significant other have different opinions on who is making the financial decisions:
- 51.10% of women in a domestic relationship say they share financial decisions
- 37.77% of men in a domestic relationship say they share financial decisions
|Who in your household takes the lead in making financial decisions?||Women||Men|
|We share financial decisions||51.01%||37.77%|
|My spouse/significant other does||12.42%||5.59%|
|One or more of my children does||1.01%||0.80%|
|A relative outside the household advises me||2.01%||1.06%|
|A financial professional advises me||4.03%||5.32%|
Men are much more likely to think they are calling the shots.
A lack of communication about how decisions are being made and what those decisions are may result in a less informed retirement plan - not to mention stress in your relationship.
Working with a financial professional on your retirement plan can not only help with that process, it may even help close the communication gap between you and your spouse or significant other.
An overwhelming majority - 93.61% - of survey respondents who had worked with a financial planner or other professional said they shared a good understanding of their retirement plan with their domestic partner. This is much better than the 61.10% for people who had not worked with a professional on their retirement plan.
How to Affect the Gender Gap
There is no reason why men and women shouldn't feel equally comfortable with retirement-planning. For either sex, getting control of the process starts with being informed.
Communication between couples is a key to being well-informed. After all, your retirement decisions affect you both. Even if one of you is doing most of the saving or making the decisions, a good retirement plan should take into account input from both of you and result in something with which you are both comfortable.
In many cases, working with a professional financial planner can ease the process. People who specialize in this kind of work know what questions to ask and how to solve the problems that typically arise.
If it also turns out that working with a financial professional leads to a better understanding between you and your partner, then that's just another reason to get the process started.