The Millennial Generation Are Closing the
Savings Gap But Risks Remain
Female “Smart Savers” Break Out From the
Pack by Increasing Engagement
Fewer American women have started saving for retirement than
American men -- a savings “gender gap” with a significant impact
right up to the full retirement age, according to the annual Global
Investor Pulse Survey from BlackRock, which polled 27,500 investors
including 4,000 Americans.
In the US, 53 percent of women overall have started saving for
retirement, compared with 65 percent of men. Even among those women
who have started saving money, they have accumulated less than half
the retirement savings as men ($34,900 vs. $76,800). There is also
a gap in savings behaviors--whereas close to half of men (45%) are
willing to take on a high risk in order to achieve a good return on
investment, this falls to just 28% of women. Also, for women
investors, cash represents a greater proportion of their total
investment than men, 68% compared to 59%.
“Blessed with a longer life, it’s all too likely women will come
to find that once they retire, it will last longer than they had
planned. With lower savings rates and less willingness to take
risks, many women are faced with greater financial obstacles when
they are retired than men,” said Heather Pelant, Personal Investor
Strategist for BlackRock. “Luckily, more and more women are
becoming engaged investors, especially at a young age. That
engagement will be crucial to helping provide retirement income in
our increasingly long life.”
Reduced employment due to childcare obligations seems to have a
significant impact on women successfully saving for retirement, the
BlackRock survey indicates. For example, only about half of women
age 25 to 44 are working full-time, compared with more than
three-quarters of men that age.
Though the proportion of middle aged and older women saving for
retirement begins to match those of men, they cannot make up for
the late start so women enter pre-retirement with less saved:
American women age 55-64 with retirement savings have accumulated
just $81,300 compared with $118,400 for men that age (median
figures). This gap is particularly troubling given that women
live longer than men—at birth, the life expectancy for U.S. women
is about 79 compared to 72 for men. In the first revision of
mortality assumptions since 2000, the Society of Actuaries
estimated the average 65-year old man today will live 86.6 years,
up from the 84.6 it was estimated a decade and a half ago. The
average 65 year old woman will live 88.8 years, up from 86.4[1].
While this accounts for approximately two years longer, it’s
important for women to realize that this is the average and their
finances may need to last 10 years or more than men.
The Millennial Generation Is More
Engaged
The saving habits of millennials indicate that they are changing
and women manage finances more frequently. Millennial women are
twice as likely as Baby Boomer women to describe themselves as an
active investor (31% vs 15%), and they are nearly twice as likely
to say that they are willing to take on high risk investments to
achieve high returns (41% vs. 22%)
However, younger women continue to lag behind their male peers
in terms of their interest in investment willingness to take
investment risk to achieve high returns and perhaps most
importantly likelihood to enjoy managing investments. Only 36%
of millennial women claim to enjoy managing their investments,
compared to 70% of millennial men.
Adopting “Smart Saver” Behaviors Can Help
Women Close the Savings Gender Gap
Women could help close the saving gap by taking a cue from the
segment of investors who are successfully planning for retirement–
identified in the survey as “smart savers” – consist of those women
who have accumulated more than 5 times the savings of American
women: $112,500 compared with $21,200 (median figures).
The BlackRock survey found that these “smart savers” are
distinctive from women overall in exhibiting positive financial
behaviors which have helped them close the gender gap:
Make saving for retirement a priority – 82% of smart
savers have dedicated retirement savings compared to the US average
of 59%
Maintaining a diversified portfolio – smart savers are
more likely to be investing in equities than the US average (21% of
their portfolio vs. 14%) and hold less cash (57% of their portfolio
vs. 68%)
Manage finances frequently – the typical smart saver
spends more than 7 hours per month reviewing and making changes to
their savings and investment and 56% classify themselves as
‘active’ investors.
Plan and seek advice – smart savers approach decision
making with a sense of commitment with twice as many seeking a
professional financial advisor as the average American.
“When it comes to saving and investing, women can get
sidetracked as other obligations develop,” Pelant said. “Women can
do better by adopting good financial habits early in life, setting
their own goals, and finding the support they need to stick to
those habits over the long run, and learning from the example of
women who are successfully taking charge of their own financial
life."
About BlackRock
BlackRock is a leader in investment management, risk management
and advisory services for institutional and retail clients
worldwide. At December 31, 2014, BlackRock’s AUM was $4.652
trillion. BlackRock helps clients meet their goals and overcome
challenges with a range of products that include separate accounts,
mutual funds, iShares® (exchange-traded funds), and other pooled
investment vehicles. BlackRock also offers risk management,
advisory and enterprise investment system services to a broad base
of institutional investors through BlackRock Solutions®.
Headquartered in New York City, as of December 31, 2014, the firm
had approximately 12,200 employees in more than 30 countries and a
major presence in key global markets, including North and South
America, Europe, Asia, Australia and the Middle East and Africa.
For additional information, please visit the Company’s website at
www.blackrock.com | Twitter: @blackrock_news | Blog:
www.blackrockblog.com | LinkedIn:
www.linkedin.com/company/blackrock
About the Survey
One of the largest global surveys conducted in the financial
services industry, the BlackRock Global Investor Pulse survey
interviewed 27,500 respondents, in 20 nations: the US and Canada;
in Europe, Belgium, France, Germany, Italy, the Netherlands, Spain,
Sweden, and the UK; In Latin America, Brazil, Chile, Colombia, and
Mexico; in Asia, China, Hong Kong, India, Japan, Singapore and
Taiwan. The US sample comprised 4,000 respondents. No income or
asset qualifications were used in selecting the survey's
participants. Executed with the support of Cicero Group, an
independent research company, the survey took place from July to
August 2014. For both the global sample and the US sample of 4,000
respondents, the margin of error is +/- 1.55%.
[1] The Wall Street Journal “Longer Lives Hit Pension Plans
Hard” Tuesday, February 24, 2015
BlackRockJessica Greaney, 1-212-810
5498Jessica.greaney@blackrock.com
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