Women’s Retirement Literacy

Feb 2, 2021 / Amanda Chase, Horsesmouth Assistant Editor

Research conducted by The American College for Financial Services suggests that women’s retirement planning and income literacy trails that of men, based on a 38-question quiz testing knowledge on retirement planning, medical and longer-term care, life insurance, investing, and retirement income planning and strategies. Unlike men who claim to have higher levels of knowledge and then test poorly, women’s self-reported knowledge is more aligned to their actual literacy scores. Combined with their decision-making power and openness to advice, women represent a critical audience for financial advisors and financial services providers. Understanding how their approach to financial and retirement planning differs from men and by age, asset level, and racial or ethnic background is critical to building lasting relationships and developing products, services, and approaches that meet women’s needs.

Neither men nor women score particularly well on this retirement literacy quiz. Eighty-nine percent of women and 72% of men receive a failing grade, answering 60% or fewer of the literacy questions correctly. Women under age 65, African American women, and those with assets between $100,000 and $500,000 have lower retirement literacy scores than women overall. However, African American women with assets of $500,000 or more score especially well,answering 47% of questions correctly, which is on par with men.

Women score best in the health and long-term care section of quiz, correctly answering 46% of questions, on average. Scores are lower, and notably lower than men, when it comes to life insurance, investing and strategies for generating retirement income, including annuitization. Nearly 2 in 3 women say that they have tried to figure out how much money they will need to save in retirement. It’s a healthy majority that holds across age and ethnic groups, but it is significantly lower than the three-quarters of men who say they’ve made this critical calculation.

You can find the full Women’s Retirement Literacy Report here.

 

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