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Women Lag Men in 401(k) Savings, Struggle with Financial Confidence

Industry Trends and Research

Despite progress made over the last several years, women continue to have a savings gap compared to their male counterparts and are feeling less secure financially, two new studies reveal.

According to a recent T. Rowe Price survey focused on the financial behavior and attitudes related to gender, Baby Boomer women have a median 401(k) savings balance of $59,000, less than half of the $138,000 median balance of Baby Boomer men. This savings gap carries over to Millennial women, who have a median 401(k) balance that is $30,000 less than the median balance of Millennial men.

Additionally, they are deferring less of their income to their 401(k)s, and 66% of the women who are contributing below the recommended rate say that they are saving as much as they can afford. These women are also significantly less likely to be saving for retirement in accounts outside of their 401(k)s compared with men, with 10% saying they use other vehicles – compared with 32% of men the same age. Women are also more likely to believe they will have to reduce their standard of living in retirement (46%) compared with men (37%).

When it comes to financial advice, T. Rowe Price’s survey shows that both men and women cite ease of use as their most favored attribute for financial advice. Women, however, place more importance on advice that fits into their work or personal schedule, as opposed to men, who place more importance on advice that alerts them to critical developments in their accounts.

Decline in Confidence

Similarly, Allianz Life’s 2019 Women, Money and Power Study shows that while the past few years have put a spotlight on female empowerment, women say they are struggling to make progress with financial confidence. 

In fact, the study notes, the financial picture for women isn’t particularly bright when compared with the findings from the past few years, with women experiencing a steady downward trajectory in several key areas. For example, fewer women say they:

  • feel financially secure (62% in 2019 compared with 68% in 2016);
  • have more earning power (42% in 2019 compared with 50% in 2016); or  
  • are the breadwinner in their household (38% in 2019 compared with 47% in 2016).

Standing Out

Specific groups, however, say they are feeling more secure and confident in their financial decisionmaking. Millennial women are more likely than other generations to have asked for a promotion or raise at work, and more than half say they have more earning power than ever before.

Additionally, Millennial women aren’t as fazed by recent market volatility, according to Allianz’s findings. Nearly half (49%) say they are comfortable with current market conditions and are ready to invest now, compared with 29% of Gen Xers and 37% of Baby Boomers.

Confidence is also on the rise for divorced women, who are feeling more financially secure – registering at 65% in 2019 compared with 50% in 2016. Divorced women also feel increasingly on track financially the longer they have been divorced. Women who have been divorced for more than 10 years say they:

  • have a better understanding of the financial products they own;
  • are better about setting and achieving financial goals; and
  • are better about saving for long-term goals compared with women who have been divorced for less time.

An additional bright spot was with long-term financial planning. Despite some of the reported backward steps with personal finances, women say they are taking on more responsibility for managing household long-term savings and finances, increasing to 90% in 2019 versus 86% in 2016.

However, only one-quarter of women in Allianz’s study say they currently have a financial professional, which is down from 30% in the 2016 study. Of those who are working with one, 60% say that their financial professional treats their spouse/partner as the decisionmaker, which may cause women to feel less independent (81% in 2019 versus 87% in 2016) or confident (83% in 2019 versus 91% in 2016).

T. Rowe Price’s findings are based on a national study conducted from July 24-Aug. 14, 2018, among 3,005 adults age 21 and older who have never retired and are currently contributing to a 401(k) plan or are eligible to contribute and have an account balance of at least $1,000, and of 1,005 current retirees who have a rollover IRA or left-in-plan 401(k) balance.

The Allianz Life Women, Money, and Power Study was commissioned by Allianz Life Insurance Company of North America via an online survey in April 2019 with a nationally representative sample of 900 women, ages 25-75, with household income of $30,000 per year or higher. 

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