News Articles of Interest

» TimYounkin - Females trailing Males In Savings

By Diana McCabe
The Orange County Register
Oct. 18, 1999

They left the kitchen, headed into the workforce and brought home the bacon. But decades later, many American women are still struggling to invest and save that hard-earned income.

Among female baby boomers, 58 percent have saved less than $10,000 in a pension or 401(k) plan, according to the National Center for Women and Retirement Research at Southhampton College of Long Island University. Their male counterparts have saved three times more.

What's going on here? Isn't this 1999, when a raging bull market has made portfolios fat and financial information abounds? Why aren't women doing as well as men with their retirement money?

Many experts blame it on society and its strong grip on women's psyches. A combination of factors has held most women back, says Victoria Collins, a certified financial planner in Irvine, Calif.:

Women earn less than men.

Women have a lower tolerance for risk and tend to be financially conservative when they need to be aggressive.

Women tend to take care of others first - paying for a child's college tuition or helping with a down payment, for example - before saving for their retirement.

"I tell them, `It's time to take care of yourself,' " Collins said. "It's a very different message from what women have heard throughout the years."

Christopher Hayes, founder and executive director of National Center for Women and Retirement Research, agrees. Men have been socialized to be risk takers and decisionmakers when it comes to money - women haven't, he says.

"During childhood, subliminal messages constantly reinforce the idea that girls aren't supposed to worry about money," he writes in his book, Money Makeovers: How Women Can Control Their Financial Destiny. "Is it any wonder, then, that as adults, women tend to adhere to the role that has been set for them?"

Financial experts say it is important for women to understand the psychology behind their attitudes toward money. Being overly cautious and hesitating to the point of indecisiveness will prove costly.

For example, a woman who is 20 years away from retiring might invest in bonds or CDs because she doesn't want to risk losing everything, Collins says.

"But when you hold onto money too tightly, it doesn't grow," she added.

Women tend to view money as a pool - "once it is gone, it is difficult to replace," Collins says.

That viewpoint is based on the fact that women earn less than men, so they have less discretionary income to invest, she says.

But men view money as a stream.

"They know money flows. . . . If they lose some, they can make more," Collins said. "Women don't have that confidence level yet."

It's important that they do understand, though. Hayes' research on baby boomers shows the average female born between 1946 and 1964 might have to remain in the work force until at least age 74 because of inadequate financial savings and pension coverage.

Still, women have made important strides.

"Women today are very much into their careers and are acting on their own behalf," said Barbara Steinmetz, a certified financial planner in San Francisco and board member of the International Association for Financial Planning. "That wasn't the case years ago."

When Steinmetz says "years ago," she isn't simply referring to the 1950s or '60s or '70s, when the husband usually handled the checkbook and planned the retirement. She's talking about the time before the past three to four years, when the financial industry finally realized that women not only had money to invest - but wanted to.

At the same time, "women realized they didn't want to be left behind in this bull market," Steinmetz says. "They saw men making money with their 401(k) plans and didn't want to be left out."

Younger women, the Gen X'ers, tend to be more in control of their financial destinies because they've lived through divorce.

"They have clearly seen the precarious financial situation their mothers have been in because of divorce, and have learned," Hayes said.

These women are asking questions - ones that many men probably want to ask but are afraid to, Steinmetz said.

Several experts said the simple fact that women take the time to ask and investigate will make them better investors than most men over the long haul.

-- posted by TimYounkin

» schatze - I wish I had daughters.....

As a side bar, I would just like to say hello and introduce myself. I am the new contributing editor for speech/language disorders and I am notorious for typos....

That aside, I have two beautiful boys who are learning the importance of responsibly handling their money. I had an excellent teacher myself ( gee thanks mom) so in a way I kind of wish I had daughters to pass my knowledge on to as well.

I grew up first born grandchild on my mother's side and I was considered a boy for all practical purposes-- I was raised on my parent's and grandparent's farm and have done it all from birthing pigs and mucking pens to pitching in ball games with the boys.... I think investing has alot to do with your personality and exactly, the way you were raised. I was brought up to stand none-to-nose against any boy. This makes me any boy's "dream mommy" cuz I throw the football better than daddy sometimes, but in all seriousness, I have learned I have to depend upon myself.

Be it divorce or some other factor, women have had to learn to take control of themselves in all respects, not just monetarily, and it has been tremendous and very scary for some of us. I was fortunate enough to have been brought up to be a bit "tom-boyish" and I sincerely think it has made all the difference in the world as far as how I relate to men, problem-solving, putting myself through college, etc.

It is sad to think that women have had aspirations of this nature decades if not centuries ago and we are just beginning to understand we can do for ourselves. I do wish I had girls to pass this knowledge on to. Maybe mentorship is the way for some of us to help the young women whose mothers are still having difficulty understanding this independence/self-reliance thing to. That and an exposure to http://www.fool.com-- they have the best boards for support. Try the Wisconsin message board-- all are welcomed there.

Happy Y2K!
Schatze Rasmussen

-- posted by schatze