Working women not only earn less on average than their male counterparts. They also set aside less money for retirement, raising the prospect of financial difficulties later in life, according to a report released June 14.
"Gender Gap in Financial Literacy," by El Segundo, California-based Financial Finesse, found that men and women are virtually equal when it comes to participating in company-sponsored 401k and other retirement plans. Ninety-two percent of women participate vs. 91 percent of men. That's up from 83 percent and 88 percent, respectively, in 2010.
According to the survey of 2,244 U.S. workers taken in the first quarter of 2011, women are "markedly less confident" than men about investing. Only 25 percent of female workers express confidence in how their retirement investments are allocated, in comparison to 42 percent of men.
Uncertainty among women stems largely from a lack of knowledge about financial products and services, resulting in investments that may be too conservative to outpace inflation, says Liz Davidson, CEO of Financial Finesse, which provides financial-education programs to about 400 U.S. employers, including many of Fortune 500 companies.
The Financial Finesse research confirms findings of earlier reports, including one in February by Windsor, Connecticut-based LIMRA, a consulting firm to the financial services and insurance industries. Its survey of 2,500 private-sector employees concludes that women save 40 percent less for retirement than men.
Angst regarding retirement is not confined to women. Despite the increasing participation in retirement plans, only 12 percent of women and 19 percent of men expect to have enough money when they reach retirement age, according to Financial Finesse. Worries about record federal debt, inflation, and potentially higher taxes are eroding worker confidence, Davidson says. "I also believe it is due to the fact that as employees focus more on retirement, they are realizing just how far behind they are."
Although concern cuts across gender, women face more obstacles to retirement than men, Davidson says. Among them: they live an average of five years longer than men, have higher health care costs throughout their lives and tend to earn less money.
Other findings:
• 64 percent of women say they have a "general knowledge" about stocks, bonds and mutual funds, vs. 84 percent of men.
• 61 percent of men say they have an "emergency fund" to pay bills in case they lose their job, compared to 46 percent of women.
• 63 percent of women say they "spend less than I make each month," in contrast to 8 in 10 of men.
If there is good news, it may be that employers are realizing the need to help their employees by providing more targeted advice, online benefits-planning tools, and one-on-one consultations with financial planners.
"What we're seeing is a new mindset," Davidson says. "Employers are bringing this up when we talk with them."
