Women Risk Their Retirement by Making This Avoidable Mistake

A young woman studies a laptop computer screen and holds a pen in an office
Photo by Viktoriia Hnatiuk / Shutterstock.com

The path to retirement is a steeper climb for women from the get-go: We tend to earn less and live longer than men.

So, we can’t afford to fumble funding our retirement. Yet, underinvesting is women’s biggest financial regret, according to a recent report on women’s financial wellness from Merrill Lynch and Age Wave.

About 3,700 adults were polled for the report, with more than 2,600 of them being women. Respondents represented all education, income and asset levels and were of various ages, races and marital statuses.

One question posed to women was:

“What do you wish you had done differently to feel more financially secure today?”

The most common response was “invested more of my money” — with 41 percent of women responding this way. That answer beat out choosing a better-paying career, taking on less credit card debt and living within or below one’s means.

Investing wisely and consistently is one of the best ways to build wealth — if not the best way. So, if women are failing to make the most of this tool, they are jeopardizing their nest eggs.

Why women regret underinvesting

Based on the report, it appears a lack of confidence could be at issue. Women and men report feeling about equally confident about various financial tasks with the exception of investing.

The share of women who are confident at paying bills and budgeting is actually 1 percentage point higher than the share of men who feel that way. And when it comes to paying off debt and choosing insurance, women are only 2 percentage points behind men.

When it comes to managing investments, however, 52 percent of women feel confident compared with 68 percent of men. That’s a difference of 16 percentage points.

This lack of confidence is ironic, considering that analyses have shown women are better at investing than men.

For example, Fidelity Investments reported last year that women’s returns beat men’s by an average of 40 basis points, or 0.4 percent. SigFig Wealth Management found the same difference in returns.

A simple solution

This news of where women stand on investing pains me. Not because I am a woman or work in personal finance, but because you can easily avoid investing regrets and lack of investing confidence with a little education.

I’m not talking about a college degree, just some strategic reading. All you need is an internet connection or a library card.

As Money Talks News founder Stacy Johnson puts it in “Ask Stacy: Do I Need a Financial Adviser, or Can I Manage My Money Myself?”:

“Money management isn’t rocket science. In fact, I’d consider it more basic than income taxes. Providing you’re willing to do a little reading, you can easily do it yourself.”

If you spend a lot of time online, find some financial websites that suit your current financial literacy level and financial goals. I hear Money Talks News is fantastic — perhaps start with “5 Simple Ways to Invest Your Retirement Savings,” penned by a woman.

If you prefer books, try the writings of investing gurus like Warren Buffett and John C. Bogle. (Yes, I realize they are men, but it’s their investing track records that make their advice worthwhile.)

If you’ve tried to educate yourself about investing and still find it too intimidating to manage your own investments, there’s no shame in pursuing a financial adviser. It’s arguably the smart thing to do in such a case — provided you vet the person.

How would you rate your confidence in managing investments? Share with us below or over on our Facebook page

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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