If you’ve spent any time on social media lately, you might get the impression that men and women are at war. Well, not really, but there sure is quite a bit of competition between the sexes! Some of it is in good fun, while other issues will continue to be hashed out politically. In the meantime, we thought it might be interesting to contrast investment habits between men and women. More importantly, what could we learn from one another?
Traditionally, women have been known as more conservative investors, while men take more risks. Men tended to save more money, but that could have been due to an income disparity between the sexes (which is now closing).
So, how do men and women currently differ with regard to their investing practices? According to the Vanguard Group’s Center for Retirement Research, the differences break down as follows:
- When employer-sponsored 401(k) plans offer voluntary enrollment, 66 percent of women opt in, as opposed to 58 percent of men
- 42 percent of women in a defined contribution plan have a target-date fund, typically known to be a more conservative investment strategy
- 36 percent of men in a defined contribution plan have a target-date fund
- Among workers earning six-figure incomes, women save an average of 9 percent for retirement while men save 7.9 percent
What do these statistics tell us? First, that women are more likely to enroll in a voluntary employer-sponsored retirement plan. They are also more likely to opt for a more conservative investment strategy, while men might prefer to take a bit more risk.
Women even save for retirement at a slightly higher percentage rate, at least among higher income brackets.
On the other hand, we know that women still tend to take more time away from their careers, to turn their attention to other things such as birthing and raising children. So while they might opt into retirement funds more often, or save at a slightly higher percentage rate, women are still playing catch-up with regard to financial planning. On that note, men do take a bit more risk which can sometimes lead to greater potential for growth… But it is easier to do that when you’re less worried about making up for missed time.
The differences, though they still exist, appear to be more narrow than in the past. The main thing that both men and women should remember is that professional guidance is invaluable to everyone. Give us a call and we can discuss your savings rate, your risk tolerance, and other issues related to your retirement plan. Financial planning is important to everyone, but professional guidance can help you personalize your plans to suit your individual circumstances.