A large cohort of retirement-age American women lack financial literacy, according to The American College of Financial Services' latest RICP retirement income literacy survey.
Only 18% of women could pass a basic quiz on how to make their savings last in retirement, compared with 35% of retirement-age men, yet a majority of women were still extremely confident that they and their spouses would have enough money to retire comfortably.
Greenwald & Associates conducted online interviews in February and March with 1,244 Americans ages 60 to 75 who had at least $100,000 in household assets, not including their primary residence.
According to the survey, women demonstrated lower literacy rates than men in most of the quiz's knowledge categories. Following is a selection of knowledge categories, with the percentage of correct responses:
- Annuity products in retirement — women 16%, men 24%
- Company retirement plans — women 30%, men 40%
- Investment considerations in retirement planning — women 31%, men 49%
- Strategies for sustaining income through retirement — women 34%, men 48%
- Paying for long-term care expenses — women 38%, men 35%
- Medicare insurance planning — women 76%, men 76%
- Passed quiz — women 18%, men 35%
Women in the survey were aware that they had poor retirement literacy. Only 33% of female respondents said they were extremely knowledgeable about retirement income planning, compared with 44% of males.
This did not affect their confidence in retirement, however. Fifty-five percent of women purported to be extremely confident that their money would last throughout retirement.
The quiz results told a different story. Just 24% of extremely confident women passed, versus 42% of extremely confident men.
In all the quiz's knowledge categories — including strategies for sustaining income, life expectancy and life insurance — women reported lower self-perceived retirement income planning knowledge than men.
"Women face considerable challenges when it comes to preparing for retirement, and lacking financial literacy certainly does not help the cause," Jocelyn Wright, State Farm chair in women and financial services and assistant professor of women's studies at The American College of Financial Services, said in a statement.
"This is a problem, especially when a female at age 65 can expect to live another 20 years on average, two years longer than the average man. With this in mind, women cannot depend on their spouse to hold the keys to their retirement. It is time to get smart on how to navigate this complex and extremely important stage of life."
Financial Decision-Making
According to the survey, men tend to consider themselves the primary decision maker, while women are inclined to believe that they split the decision making. In fact, 80% of women said that they shared the decision making with their spouse, while only 35% of men said they did so.
Only a fifth of women surveyed said they were the primary financial decision maker, compared with two-thirds of married male respondents.
