Pattie Lovett-Reid: Your retirement literacy may be worse than you think
There appears to be a disconnect between what women think they know about retirement planning and what they actually know.
Over 80 per cent of women failed the Retirement Income Literacy Quiz offered by The American College of Financial Services. What is a little more worrisome than the failure rate was the majority of women (55 per cent) are still extremely confident they and their spouses would have enough money to retire comfortably. It appears women are aware they have poor retirement literacy, yet this doesn’t impact their confidence in retirement.
When it comes to strategies for sustaining income, life expectancy and life insurance, women all reported lower self-perceived retirement income planning knowledge than men.
Here is the challenge: women aged 65 can expect to live another 20 years on average – two years longer than their male counterparts. With this in mind, women cannot abdicate responsibility for their financial future someone to else. A period of crisis is not the time to figure out your financial situation.
According to other findings from the survey, men tend to think they are the primary financial decision-maker, while women tend to believe that they split the decision-making process. In fact, there is a disconnect between men and women on whether finances are a team effort. Eighty per cent of women said they shared in the financial decision-making process, while only 35 per cent of men felt they shared in the process.
There is a silver lining here: while the majority of women are lacking retirement income literacy, most do understand the value of a financial advisor and were likely to reach out and get the help they need.
Retirement Income Literacy: Women vs Men
|Knowledge Categories||% Correct Women||% Correct Men|
|Annuity products in retirement||16%||24%|
|Company retirement plans||30%||40%|
|Investment considerations in retirement planning||31%||49%|
|Strategies for sustaining income throughout retirement||34%||48%|
|Paying for long-term care expenses||38%||35%|
|Medicare insurance planning||76%||76%|
By the way, while only 18 per cent of women passed the quiz, the majority of men failed too, with only 35 per cent passing. We could all do a whole lot better so we don't fail retirement.