The gender investing gap by the numbers

A 2020 poll by CNBC and SurveyMonkey found that one-fifth of women have nothing saved for retirement. The reasons for women not saving for retirement are many, according to multiple recent studies. Women continue to earn less than their male counterparts in the workplace, yet still have similar household bills to pay, leaving less money left over for savings. Some women are saving, but don’t have an organized system in place to know how much they are saving, or if it will be enough.

While just 22% of women considered borrowing from their retirement savings during the past year’s pandemic, 42% of men borrowed, or considered borrowing, from their retirement accounts in order to stay afloat, according to a study by Transamerica Center for Retirement Studies. Financial advisors advise against borrowing from a 401(k) unless it’s a real emergency.

When it comes to investing in stocks, 51% of men appear to be OK investing in companies with questionable social implications (e.g., cigarette companies), according to a 2020 report by Money Crashers. However, most women report they would avoid investing in companies that were not socially responsible.

Women are confident in other financial areas, such as paying bills and budgeting. In fact, for those who do invest, they do very well. However, a 2018 Merrill Lynch and Age Wave study found that those who haven’t attempted to invest yet don’t feel confident going into it.

The gender wage gap is one that affects every aspect of a woman’s financial life, today and into the future. Census Bureau data shows the amount of the wage gap can also vary significantly depending on career choice, race, and the state in which a woman is employed.

Men ranked saving for retirement as their #1 priority in a 2017 Willis Towers Watson survey. Women, on the other hand, ranked retirement saving as #5 behind daily costs of living and paying down debt.

The National Bureau of Economic Research reports that while most men retire around 64, women retire earlier, around 62, due to factors such as being let go from a job, retiring with their spouse, or taking care of a family member. Retiring earlier means workers lose out on more of their Social Security benefits and don’t qualify for Medicare until they are 65.

Men tend to be aggressive investors, choosing stocks that have had massive gains and hoping for continued momentum, according to an academic study published in January 2021. Women, on the other hand, are more likely to be contrarian investors: They are more attracted to stocks that have recently lost money in the hope that the stock’s luck will turn around.

For women moving up the career ladder, it’s important to factor in everything that can affect salary and, in turn, investments and savings. According to Payscale, the average woman will hit her salary peak at 44, earning an average of $66,700, while a man will hit his salary peak at 55, earning an average of $101,200.

The percentage of single men and women saving for retirement is roughly the same (44% of single men are saving), according to the research from the Economic Policy Institute. However, single women have just $28,000 saved, while the single male in the same situation has $40,000 saved. Women will also typically live longer, making these numbers more worrisome.

On average, in an uncontrolled earnings scenario, Payscale reports that women will earn significantly less than a man in a comparable position. This means she will need to work longer, save more, and invest more over her lifetime in order to be prepared for retirement.

Because women tend to live longer than men, on average, many women have a fear that no matter how much they save for retirement, they will end up running out of money by the time they turn 80, according to a 2018 study by Merrill Lynch and Age Wave. As of 2018, the average life expectancy of U.S. males was 76.2, whereas females are expected to live to 81.2.

Without a clear path to financial stability for the future, many women will be left on a rocky footing in their retirement years. However, a study by John Hancock’s Twine Savings and Investing app found 45% of the women who take the time to create goals and plan toward a specific financial outcome say that they are motivated to achieve that goal.

While men may be comfortable using a digital-only service, women prefer the personal touch and advice of a financial advisor who can lead them toward the best investments, according to 2020 research from McKinsey. Affluent women investors are willing to pay more (up to a 1% or higher fee) for personalized service, where affluent males will not.

For the women who do decide to invest in the stock market, they tend to come out ahead of the men, in general. Women tend to be cooler under pressure, holding onto stocks and letting them build up money instead of selling them at the first sign of trouble.