The Retirement Crisis Women Are Facing

I saw a pretty terrifying statistic this week that reminded me of why She Spends exists. Just 17% of older women polled were able to pass a retirement planning literacy test, according to The American College of Financial Services.

The test includes 38 questions about planning for retirement, such as how much you should have saved up, how your retirement investments work and when you can use them. If you’re interested, you can take the quiz here

While the men who took the quiz didn’t fare well either (just 35% of men polled passed the quiz), it’s clear that there’s yet another gender gap we have to bridge. 

“The results of this study reveal that women continue to require more financial education and
increased planning,” Jocelyn Wright, State Farm chair in women and financial services, said in a statement. “Throughout their lifetime women will face challenges that include longer
life expectancy, lower income, increased need for long-term care and they are more likely to
experience widowhood.”

So not only are our financial literacy levels lower than those of men, but we also have all these extra challenges that go along with being a woman to surmount as we save for retirement. Also of note: people with more money did better on the quiz than poorer individuals. And because women make less than men, we’re more likely to exist in lower income brackets.

Other interesting findings? Women who were the primary financial planners in their households did better on the quiz, and those who shared the decisions with their spouse actually scored worse than average (just 12% passed!). 

It’s clear that we need some work when it comes to financial knowledge. Keep following She Spends(and have a look back at our piece on retirement savings). Pass the newsletter along to a friend. The importance of this knowledge cannot be understated. 

- Alicia McElhaney / She Spends Issue #13