Women Face Dual Dilemma: Less Savings, Longer Lifespans
Less Than Half of Women Surveyed are Confident about Meeting Future Financial Needs
Concerns Mounting Over Healthcare, Social Security and Taxes
BOSTON (June 1, 2017) – The 2017 MFS Heritage Planning Survey results reflect a major financial planning dilemma for women, who need to save more than men because they live longer, but find it hard to do because they leave work to care for their families. That cuts into women's confidence. According to the survey just four in 10 women are confident in their ability to address financial concerns and just one-third of women surveyed are confident they'll be able to save enough for retirement. The survey, which includes insights from 2,000 US investors, including 998 female investors, was conducted in conjunction with the 20th Anniversary of MFS' Heritage Planning program for financial advisors.
Women with children are much more likely than men to see job disruptions and a loss in retirement savings. According to recent Bureau of Labor statistics, 70.5% of women with children under the age of 18 participate in the workforce – compared to 92.8% of men with children under 18. It's even starker for women with young children, as just 64.7% of moms with kids under the age of 6 participate in the workforce. Jenine Garrelick, Senior Managing Director of Internal Sales with MFS, says it's important for women who leave the workforce to continue to save money for retirement.
"Due to the effects of compounding, saving money for retirement during the early years in your career is crucial," says Garrelick. "For women who've put their careers on hold, there are investment vehicles, such as spousal IRAs, that can help them avoid putting their retirement security in jeopardy. However, our research shows that most women don't know about the options available to them."
That continuity of saving becomes even more critical given that women, on average live about five years longer than men1 – which means they'll need more money for retirement and healthcare expenses.
Part of the solution is education. Just one in five women say they are extremely knowledgeable about investing and half of those surveyed say they are overwhelmed by their investment choices. When it comes to specific investment options, only four in ten women surveyed said they are extremely knowledgeable about college savings accounts, IRAs and employer-sponsored retirement plans. It's not surprising then, that over 70% of women surveyed said they would like to be more knowledgeable about investing and 57% of those with financial advisors said they would turn to those advisors in the next few years for more support.
"There is a clear opportunity for advisors to help women fill the education gap," says Susan Kay, Director of Business Development with MFS. "But advisors must be able to speak to women's specific concerns to help them build a sound financial future. Eight in 10 women working with financial advisors believe it's extremely important to turn to their advisor for retirement planning, but they are also worried about a host of other issues that they might face in retirement."
Outliving their savings
Two-thirds of women surveyed said they are extremely or very concerned about rising healthcare costs and half of those surveyed are concerned about a reduction in Social Security benefits. These concerns were most pronounced among Boomers, who are either on the cusp of or just entering retirement. The cost of healthcare and a possible reduction in Social Security benefits were significant concerns for 71% and 53% of Boomers, respectively. In fact, over half of women surveyed are concerned that they won't be able to retire when they want to. This belief is especially pronounced among younger women. Sixty-three percent of Millennial women and 68% of Gen X women are concerned about saving enough for retirement.
"There is no longer a 'traditional role' for women. Whether its Boomers, Gen X or Millennials, many women are concerned that they're going to outlive their retirement savings," said Garrelick. "Financial advisors need to spend more time really getting to know their female clients and prospects, because each one of them is an individual with concerns very unique to her own situation."
About the survey
MFS Investment Management reexamined the research behind its Heritage Planning program by conducting a study among individual investors in the United States. The sample totaled 2,000 respondents, broken out as follows: 998 females and 1,002 males. Millennials refers to investors ages 21 to 36. Gen X refers to investors ages of 37-51. Boomers refers to investors ages of 52-70. The Silent Generation refers to investors ages 71 to 81. To qualify, individual investors must have $50K or more in household income, own at least one mutual fund, and make or share in the financial decision making for their household. The survey was conducted from December 14, 2016 to January 9, 2017. MFS was not identified as the sponsor of the survey.
About MFS Investment Management
Established in 1924, MFS is an active, global asset manager with investment offices in Boston, Hong Kong, London, Mexico City, São Paulo, Singapore, Sydney, Tokyo and Toronto. We employ a uniquely collaborative approach to build better insights for our clients. Our investment approach has three core elements: integrated research, global collaboration and active risk management. As of April 30, 2017, MFS manages $448.7 billion in assets on behalf of individual and institutional investors worldwide.
1"Health, United States, 2015", Centers for Disease Control and Prevention.