Women often face more financial challenges than men as a result of lower salaries, prolonged career breaks, and relative longevity, according to a study recently published by the BMO Retirement Institute.
Women tend to have smaller pensions or 401(k) balances, on average earn less than men while working, and are more likely to have part-time jobs with limited retirement benefits. Women also leave the workforce more than men to become family caregivers, further reducing their ability to save.
The study showed that men and women have very different approaches to preparing for retirement. For example, men are more likely than women to feel very confident that they will have enough retirement income to live comfortably with funds for both basic and medical expenses. But women are generally less confident in their knowledge about financial products and services.
More men than women indicated they are somewhat or very knowledgeable about IRAs, Roth IRAs, Rollover IRAs, and Social Security. Also, men are three times as likely as women to describe their investment style as “aggressive,” while women are more likely to describe their style as “pragmatic” or “conservative.” Moreover, nearly half of the men surveyed have a do-it-yourself attitude to retirement planning, compared to about one-third of the women.
The authors suggested that women need to consider improving their level of financial literacy while becoming more engaged in the financial planning process. On the other hand, men could benefit from being more receptive to advice from experts and recognizing their financial limitations. Researchers added, “Men would do well to keep in mind that retirement is a life event as well as a financial event, and that preparing for the social aspect of retirement is equally important as preparing for its finances.”
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