March is Women’s History Month, an annual celebration of the contributions, achievements and impacts of powerful women throughout history. One thing worth celebrating this March is women’s increasing economic power.
Women’s History Month started on March 7, 1982, as “Women’s History Week” and continued every year until 1987, until it was extended to include the entire month of March. Thanks to petitioning from the National Women’s History Project, every March from then on was declared “Women’s History Month'' and dedicated to recognizing achievements women have made over the course of history. Both International Women’s Day and Equal Pay Day are also celebrated in the month of March.
What better time than now to shine a light on the large number of women taking on more financial responsibility? More and more women achieve greater financial independence despite facing economic hurdles.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
This Women's History Month, women are taking on more financial responsibility
Allianz Life recently released their 2023 Women, Money and Power Study, which shows a significant number of women taking on more financial responsibility. Although women weren’t allowed to open a credit card until 1974, that hasn’t stopped them — the study found that nearly half of all women (49%) consider themselves their household’s CFO, compared to 41% in 2021. And for married women, there’s an even higher jump — 34% in 2021 to 43% in 2023.
Furthermore, the study also found that the number of women who identify as the primary breadwinners in their families has increased from 34% in 2021 to 43% in 2023. This was most commonly felt among millennial women. Additionally, 51% of women reported that they felt more financially savvy than their spouse or partner.
The study also found a correlation between women’s increased financial independence and the number of women seeking financial guidance from a professional. Currently, one in three women (33%) meet with a financial professional, up from just 26% in 2021.
"A great first step for anyone is to increase their knowledge around investing, budgeting, and general financial planning," Jaime Eckels, a certified financial planner and Wealth Management Partner with Plante Moran Financial Advisors tells Kiplinger.
Professional guidance can help women develop a long-term financial strategy, which in turn bolsters financial confidence — something many women are still lacking. In fact, 73% of women wish they would have met with a financial professional sooner.
A study from Achieve found that 68% of women are either “not very” or “not at all” confident in their outlook for the economy in 2024, compared to 57% of men. And Allianz found that women are feeling less secure financially than they did in the past, with only 64% of women saying they feel secure, compared to 72% in 2021. Just 52% of women reported feeling confident about their retirement plans.
“What we found in the study that’s interesting is that while more women are the breadwinners and CFOs of their household, there isn’t always a strong sense of financial security," Heidi Vanderkloot, head of FMO distribution at Allianz Life Insurance Company of North America, tells Kiplinger. "We can conclude that economic resources don’t necessarily translate to financial confidence. In the study, we asked women about their main worries and what keeps them up at night. The top worries were running out of money in retirement, rising costs of health insurance, and loss of a significant other."
The gender pay gap impacts women's ability to save
Although women increasingly take financial matters into their own hands, they still face economic inequalities. A substantial hurdle women have to face is the gender pay gap — the difference in median hourly earnings between men and women who work full or part-time. In the U.S., women earn 84 cents for every dollar a man makes, meaning women have to work longer than men just to earn the same amount. A woman has to work about 14.5 months to earn the same as a man in 12 months. The gap in wages cannot be explained by one singular reason, but instead persists due to multiple factors — like occupational segregation, educational attainment and gender discrimination. The gender pay gap significantly impacts women's capacity to save, putting them at a disadvantage.
"It’s not uncommon for a woman to take a break early in her career to care for children or aging parents, which can mean they miss out on salary increases and career advancements. Even moving to a part-time position can mean they may not be eligible for full benefits like 401k contributions or healthcare coverage," says Eckels.
In fact, women have significantly less saved in 401(k)s than men — with the average account balance for men being 50% greater than that of women, according to BofA’s 2023 Financial Life Benefits Impact Report.
"This can create financial planning obstacles because saving early allows people to maximize time for their investments to grow and compound — meaning a loss of income opportunity early in a career can have a big impact on retirement savings down the road," explains Eckels. "And because women typically live longer than men, their retirement savings are particularly important."
In 2020, women reported annual contributions to retirement accounts that were around 30% lower than men’s contributions. Furthermore, according to Achieve, 45% of women reported having zero emergency savings, compared to 32% of men.
However, you can alleviate these worries. "Writing down a long-term financial plan is a great example that can help many people feel more confident in their finances and where they’re headed for the future," shares Vanderkloot. "A strong strategy will include ways to address risks that could cause them to spend down their savings faster than expected during retirement. Those risk management strategies could include adding financial products like an annuity that offers a level of protection from risks to their portfolio like market volatility, inflation and longevity.”
Related Content
-
Focus on These Five Critical Areas in Retirement PlanningWorried about how you'll pay for your retirement? It can help to structure your finances around five key areas: taxes, income, medical, legacy and investments.
-
Is Downsizing Right for Your Retirement?The lower costs of a smaller home in retirement might sound appealing, but be ready for the trade-offs that come with making this big decision.
