The shocking results of this retirement income literacy test
Retired women are more likely to fail a financial quiz due to their lack of basic retirement knowledge.
A recent 2017 Retirement Income Literacy Gender Differences Report (RICP) revealed that more than 80 percent of women fail a retirement income literacy quiz. The results raise concerns about older women’s lack of basic retirement knowledge given the challenges they face during retirement.
The quiz featured questions on annuities, company retirement plans, Medicaid planning, and paying for long-term expenses, among others. Only 18 percent of women aged between 60 and 75 passed the quiz compared to 35 percent of men. Both pass rates are concerning, but industry observers say it is particularly troublesome for women because they tend to live longer and accumulate higher health care costs, per CNBC.
Here are three things to do to help improve women’s financial literacy:
Invest more aggressively
Women need to make their money last longer than men do in retirement. To do so, women need to be more aggressive in investing at some point and improve their financial savviness.
“Women are newer to the work force, so the conversations revolving around investing is a newer conversation for women,” said Alexandra Levi, a managing partner for Element Financial Group. “Women need more holistic conversations, while men will tend to make a financial decision, even without all the answers.”
Find financial advisors who know the needs of their female clients
According to the RICP survey, women and men are equally likely to seek advice from financial advisors. However, their expectations differ. Advisors must know the needs of their clients. For instance, when dealing with couples, advisors should not consider only one spouse. Women must find a financial advisor who remembers that each client is unique. In turn, financial advisors must be ready to also cater to the needs of their female clients, like receiving more explanation about the risks and strategies in retirement planning. Women also need to be more involved in the planning process, according to Forbes.
Take initiative on financial education
Ultimately, women need to be confident in making financial decisions. Financial education is key to having that self-confidence. Women should take the initiative to start learning, and there are tools they can use to start with such as online resources, seminars, the Medicare website and the MyMoney.gov. Being more proactive in planning for your future could give more chances of having a successful retirement.
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