Retirement-Age Women Twice As Likely As Men To Live In Poverty — What’s Going On?
1:00 pm, July 25th | by Amy Tennery
When it comes to personal finance, there is (if you’ll pardon the pun) a wealth of information to show women are more cautious, more meticulous and more responsible.
And yet, a new study today from the U.S. Government Accountability Office shows that women of retirement age are far more likely than men to live in poverty. What’s going on?
First, the report: A survey of men and women from 1998 to 2009 shows that women 65 years of age and older have a median income that’s 25 percent lower than that of their male counterparts, according to Bloomberg. Even worse, the federal study showed that women of that age group are twice as likely as men to be living at or below the poverty line. The gender gap here is undeniable — and the data is a shocking reminder that women face financial challenges later in life that men often don’t.
But what makes this study even more shocking is the overwhelming evidence that U.S. women, in general, are careful, prudent financial planners. Studies show that women are less likely to take risks at work and in their investments. And while it’s true that women often report feeling less confident in their investments than men, the end result of that insecurity is, in many cases, a stronger portfolio. Women don’t like to take risks — and consequently make less risky investments. In fact, a Chicago Tribune story earlier this year showed that men trade their stock 50-percent more often than women, opting for high-risk, high-reward investments, while women follow the slow and steady approach. Put simply, women are less likely than men to bet big and lose big.
It’s no wonder then that women are often the ones making their households’ long-term financial plans. A Reuters story earlier this month showed that 76 percent of women in the U.S. are now their household’s main retirement planner.
So, does today’s study on women, retirement and poverty undermine everything we previous thought about women and investing? Not exactly. In reality, the report tells us something far more troubling, that the rift between the haves and the have-nots among women may be growing even deeper than it is among men.
As the study points out, women tend to make less over the course of their lifetimes than men and take more time off of work to care for family members and kids — something that can have a profound effect on their earning potential. But the report also shows that when bad things happen — divorce, death and so on — women are affected financially more than men. And, further to that end, women who were rich to begin with can bounce back more easily.
Consider divorce, in particular. A Spectrum Group study released earlier this month showed how finances change for men and women of different economic backgrounds following divorce. Men, in general, saw their finances stay relatively stable before and after divorce — women did not.
In fact, as the study showed, women who were worth $1 million or more said they were in better financial shape after their matrimonial split. “Nearly three-quarters of women [of the that financial background] said that they became ‘knowledgeable or very knowledgeable about investment’ after their divorces,” Fox Business reported. In that sense, divorce created a wealthy, motivated class of women investors.
Staggeringly, divorce had the opposite effect on women with a net worth lower than $1 million — they tended to struggle financially.
So, are retirement-age women more likely to face poverty because of risk-taking, poor planning or financial recklessness? I’d say no. What studies like this show are how profoundly the ability to invest can affect women — in ways that it may not affect men.