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Women investors get proactive to build financial resiliency

March 03, 2022
Two female businesswomen talking.

Historically, there has been a retirement savings gap between men and women. Gender pay disparities, greater caregiving responsibilities, longer life expectancies and lower levels of retirement savings all increase the likelihood that many women will experience reduced standards of living in their post-career years.

But many women are resilient and resourceful by nature. Especially when it comes to financial challenges, the women I’ve known have taken actions to put themselves in stronger positions for the future. As an example, the COVID-19 pandemic may have dented their optimism at first, but despite two years of stress, women are taking more proactive approaches to their finances than they were a year ago. They’re also working with financial professionals to help them navigate the fluctuating pandemic and prepare for future crises.

Our seventh annual Advisor Authority study, powered by the Nationwide Retirement Institute®, uncovered these and other insights about women’s attitudes about their finances and their relationships with financial professionals. We surveyed nearly 2,500 investors and financial professionals last year to learn about many of the critical financial issues they faced as a result of the pandemic. In particular, we wanted to better understand how the ongoing pandemic has impacted women’s financial lives, how they are faring in the “new normal” and what they are doing to improve their confidence and security for the future.

Financial concerns remain

While the pandemic has been an impetus to push women investors (those with investable assets of $100,000 or more) to take decisive action to prepare for the future, they’re still concerned about economic recessions and market volatility. With good reason — women are by and large acutely aware of the risks to their finances. According to our study:

  • 70% of women investors are concerned about a U.S. economic recession in the next 12 months
  • 56% of women investors anticipate market volatility will increase in the next 12 months
  • Women investors’ biggest financial concerns are: protecting assets (31%), taxes (27%) and inflation (27%)

View this infographic to see more findings from our Advisor Authority study.

While the COVID-19 recession influenced many financial decisions that women made, our study demonstrated they were more likely than men to remain level-headed about their investment decisions following a financial crisis. While women are generally stereotyped as emotionally driven, fewer women investors (8%) withdrew funds from retirement savings plans such as 401(k)s, 403(b)s and IRAs in response to crises compared to men (15%). This is a positive finding, given the potential long-term consequences of getting out of the market even for a short period.

Newfound optimism for the future

COVID-19 changed the way we live, work and relate to one another. It also altered how women perceive their finances. Their experience living in the “new normal” is encouraging.  Women investors were significantly more optimistic about their financial outlook in 2021 compared to 2020 (49% vs. 32%).

The upheaval of the past two years, including turbulent markets and juggling their careers and childcare during remote learning, has prompted women investors to take a more proactive approach to managing financial risk and planning for their futures. Our study found:

  • 83% have a strategy to generate guaranteed retirement income
  • 73% plan to take a more active approach to investing
  • 72% have a strategy to help protect from outliving their savings
  • 59% have a strategy to help protect savings against market risk

More good news: Increasingly, women (64%) are making these money moves with support from financial professionals. Their primary reason? Working with a financial professional or advisor gives them more confidence in their financial future (40%), especially during financial crises.

Although our past studies showed that women were reluctant to seek professional advice due to competing priorities such as family and career obligations, it appears that sentiment is shifting. Women investors value their relationship with financial professionals, especially as they begin to take charge of their finances against a backdrop of ongoing pandemic-related uncertainty. </h1>

Financial professionals can help instill confidence

Women have unique financial planning needs and challenges. For instance, outliving their savings is a key financial concern for most women because they tend to live longer lives. Today, average life expectancy for a 65-year-old woman is 86.7 years1 . Plus, there’s a good chance she’ll live even longer, into the mid-90s. This is something I experienced first-hand with my grandmother, who enjoyed a long life of 102 years. But more importantly, she prepared in advance for her financial future (together with her husband, my grandfather) and stayed involved in managing her savings even in her later years.

The possibility of longer lives and longer retirements helps explain why many women seek protection from outliving their savings. Top solutions women investors have in place to help them financially through a long retirement:

  • Social Security (64%)
  • Dividend-yielding stocks (36%)
  • Pension or other defined benefit plan (33%)

Financial professionals can introduce women to solutions outside of these common strategies to find additional ways to meet their long-term financial needs in retirement, especially given the uncertain futures of traditional income sources like Social Security and pensions. Financial professionals who can tailor their strategies for the specific needs of women investors have an opportunity to build long-lasting relationships and help them gain confidence to improve their financial outlook.

Sources

  • 1

    Social Security Administration, Life Expectancy Calculator.

  • Methodology: The seventh annual Advisory Authority Survey was conducted online within the United States by The Harris Poll on behalf of Nationwide from July 22 – August 17, 2021 among 1,632 advisors and financial professionals and 839 investors, ages 18+. Among the 839 investors, there were 210 Mass Affluent, 210 Emerging High Net Worth, 210 High Net Worth and 209 Ultra High Net Worth.  Investors are weighted where necessary by age by gender, race/ethnicity, region, education, income, marital status, household size, investable assets and propensity to be online to bring them in line with their actual proportions in the population. Respondents for this survey were selected from among those who have agreed to participate in Harris Poll surveys. Because the sample is based on those who were invited to participate in Harris Poll online research, no estimates of theoretical sampling error can be calculated.

    Except where otherwise indicated, the views and opinions expressed are those of Nationwide as of the date noted, are subject to change at any time and may not come to pass.

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