Most women report that they are doing well managing their day-to-day finances, but when it comes to saving for retirement and building wealth, a new survey suggests that they are struggling.
Findings from Bank of America’s report, Women, Money, Confidence: A Lifelong Relationship, show that saving for retirement topped the list of short-term (49%) and long-term (54%) goals, although one in five women approaching retirement do not have a financial plan. In addition, 57% have not figured out how much to save for a comfortable retirement and 40% are not confident about staying comfortable in retirement.
The report is based on a nationwide survey of more than 3,500 women and 1,200 men conducted by Ipsos in February 2022 to examine the progress women are making on their financial journeys and where they might need additional guidance and support.
In gauging how women rate their financial health, women are doing well with things like paying bills every month (70%) and following a budget (53%), however they are struggling with longer-term actions like paying down debt (44%), saving for retirement (36%) and building wealth (27%). To that end, 21% acknowledge that it is time to make a change to their finances.
Additionally, while women and men have nearly equal influence on day-to-day financial decisions, such as paying bills (68% of women versus 67% of men) and determining the household budget (63% versus 63%), less than half of women feel they have influence when it comes to decisions on investments (46% versus 64%). The top obstacles women say are holding them back from investing include not having savings to invest (38%), lack of knowledge (32%) and believing investing is too risky (22%).
Paying off debt also topped the list of barriers to improving financial wellness (36%), followed by high cost of living (34%) and not being paid enough (31%).
When asked about their financial regrets, nearly half of women (44%) pointed to not saving and investing sooner. Women also say they would have invested more of their money (26%), educated themselves more around money (23%), not taken on as much credit card debt (21%), chosen a career with higher pay (19%) and lived within their means (18%).
Younger Women Taking Control
Younger women are paving the way for open financial conversations, according to Bank of America. Here, the survey found that younger women (ages 22-39) are more comfortable having financial conversations than their older counterparts (ages 65 and older), including talking with financial advisors (73% versus 64%), applying for new or better positions at work (74% versus 42%), discussing new investment opportunities (65% versus 44%) and asking for a raise (59% versus 38%).
Younger women also plan to lean on savings more compared with their older counterparts who plan to turn to Social Security to fund their retirement. According to the findings, 90% of women aged 65 or older plan to rely on Social Security in retirement versus 49% of women ages 22-39. In addition, younger women ages 22-39 are more likely to plan to use personal savings—63% versus 53% of women aged 65 or older.
The survey also reveals that financial planning varies by groups. While 82% of women say they have a financial plan, only 30% focused on plans of 10 years or more. White and Asian-American women are more likely to have long-term plans (35% and 37%, respectively) than black (20%) or Hispanic (20%) women. Women who identify as LGBTQ+ are also less likely to have a long-term plan (21%), the survey found.
Sources of Advice
Women continue to look for reliable sources of advice to help them on their financial journeys, the survey found. Though 35% say “a go-to trustworthy source for advice” would help make managing their finances easier and 44% see a financial advisor as a key financial resource, 55% have never worked with one.
Many women also seek ways to educate themselves and say it would be helpful to have easy-to-use resources that convey financial terms and concepts in more user-friendly language, Bank of America notes.
In addition, though reliance on financial advisors increased only slightly with age (41% of women ages 22-39 versus 47% of women ages 65 or older), it increased significantly by income level (35% of women with less than $50,000 in income versus 61% of women with more than $250,000 in income.
“True financial freedom requires both short-term and long-term planning, and the confidence to take action,” said Lorna Sabbia, Head of Retirement & Personal Wealth Solutions at Bank of America. “It is imperative that we give women the tools and resources to take charge of their financial futures, and to close the gaps between confidence, empowerment and action.”
