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Help Women Raise Their Retirement Income Literacy

At one point or another, we financial professionals all have used the phrase: “If you fail to plan, you plan to fail.” This is especially true when it comes to retirement planning, as it is one area of life where failure is not an option. We only get one shot and there are no retakes.

The American College Center for Retirement Income recently released the results from its 2017 RICP® Retirement Income Literacy Gender Differences Report. Although the results were not entirely unexpected, there were several factors that should be addressed. 

The report was “designed to assess retirement literacy among individuals who are nearing or already in retirement. More specifically, the goal was to determine whether retirees and pre-retirees have the knowledge they need to successfully plan for a financially secure retirement.”

The study included the responses of more than 1,200 men and women, ages 60-75 years old, with at least $100,000 of assets, not including their homes. The results revealed clear differences in retirement literacy rates based not only on gender but also on wealth and education.

Both men and women had passing rates that would make any teacher cringe. Only 17 percent of the women passed the quiz compared with 35 percent of the men.

Here are a few of the gender differences highlighted in the report:

» Women show ed lower levels of self-perceived knowledge than men did.

» Women were far more concerned about retirement risks than men were, especially about cuts to Social Security.

» There were low levels of literacy impacting decision-making by women, which could be impacting their retirement security negatively.

Respondents with assets between $100,000 and $299,000 had a pass rate of merely 13 percent versus a 49 percent pass rate among those with assets of $1 million or more. Only 9 percent of participants without a college degree achieved a passing score compared with 40 percent who had a graduate degree or higher.

All this may lead one to believe that a successful retirement is only attainable for a wealthy, educated man. And as advisors, we know nothing can be further from the truth.


Women Should Be More Aggressive Investors

When asked about the impact of low literacy rates, Jamie Hopkins, co-director of the Center for Retirement Income, said, “All people, regardless of gender, should be equipped with the knowledge that could better prepare them for retirement. However, women face a number of challenges that the average man does not face in retirement, including greater longevity. So in some ways, women should be more aggressive investors and have better retirement income literacy rates as they need to make their money last even longer in retirement.

“Unfortunately, our research demonstrates that women nearing retirement are lacking the literacy rates they need to do proper planning. Our research also shows the need for women to be more heavily involved in the household financial decisions. Too many men believe they are the sole financial decision makers in the household. This could be impacting the long-term security of women in those households.”

Two additional findings of the report may be a surprise to some but not to others. Sixty-five percent of respondents indicated that they had a relationship with a financial advisor. However, only 34 percent said they had a comprehensive financial plan.

Retirement planning is an integral part of a comprehensive financial plan. It also provides a level of comfort and motivation for clients in knowing whether they are on track to meet their retirement objectives. Female clients look to their advisors to educate them on topics that are important. They are more likely to see their advisor-client relationship in terms of “do it with me” or “do it for me” versus male clients who are more likely “do it yourself.” The sooner we begin these conversations, the better.  Everyone should have a retirement plan and understand what is needed to achieve their goals.

Here are a few tips on how we can increase retirement income literacy rates.


[1] Host education seminars or workshops. Invite experts to address subjects relating to retirement income planning. Be sure to emphasize the particular needs and concerns of women.


[2] Share relevant information on important topics. This can be via a newsletter, a website or articles of interest.


[3] Be intentional about creating an environment where clients feel comfortable asking questions. We may not always have the answers but we can provide the resources.

We are facing a retirement income crisis. Feel free to share your thoughts and ideas on what we can do to increase the retirement literacy rates among all consumers, especially women. Because a financially literate community is a strong community.  

Jocelyn Wright is the chair of The State Farm Center for Women and Financial Services at The American College. Jocelyn may be contacted at [email protected] .

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