- Only 33% of women feel optimistic or in charge of their money, compared to 44% of men.
- A full 31% of women report they’re barely surviving or keeping their head above water, while only 19% of men report similar feelings.
- As a result of 2020 market volatility, 56% of men compared to 34% of women were likely to buy new investments.
- At the same time, 44% of men and only 27% of women plan to sell investments during the pandemic.
- In other words, women are leaving their money where it is and staying the course.
These insights come from Back to (Financial) Basics: How Americans are responding after an unprecedented 2020, a survey of over 2,000 employed individuals at the end of 2020.
The pandemic has had a considerable impact on every subset of the population. Whether it’s an emotional, physical, or financial burden, we’ve all felt it.
Through it all, there’s one demographic that has been uniquely affected: Women.
Between job losses, struggles to balance parenting and working, and the fears for their financial future, the past year has taken a serious toll on women. In a recent interview, President Joe Biden even called the pandemic’s impact on women a national emergency.
The Unemployment Numbers Don’t Tell the Whole Story
Unemployment has spiked throughout the pandemic, and women have been hit especially hard. First, the Bureau of Labor Statistics data shows that women make up a disproportionate share of the jobs affected by the pandemic, which include hospitality and childcare. As we approach one year since the economic hit began, women’s jobs have been slower to come back.
Finally, many women have been forced to drop out of the workforce because of a lack of childcare. The responsibility to care for children has largely fallen on mothers’ shoulders.
Unfortunately, as startling as these facts are, they don’t even tell the whole story. In addition to the women no longer in the workforce, working women are facing a particularly difficult time compared to their male counterparts.
Women Are Less Optimistic About Their Finances During the Pandemic
The numbers largely show that women aren’t confident in their finances right now. Only 33% of women feel optimistic or in charge of their money, compared to 44% of men. Similarly, a full 31% of women report they’re barely surviving or keeping their head above water, while only 19% of men report similar feelings.
This lack of confidence could stem from many things. First, the severe job losses and extra childcare responsibilities are likely taking a toll on women, making them less optimistic. But on top of that, women are more concerned than men about their ability to build emergency savings and the security of their job. Those worries are most certainly taking a toll.
Women Are More Worried About Their Financial Futures
It’s not just the present that women are worried about. Women are far more likely than men to worry about their financial futures. 33% of women aren’t confident in their investment portfolios over the next six months, and fewer than half are confident in their retirement savings in the next six months. These numbers are significantly worse than how men report feeling.
Women are also worried about their long-term finances. Only 54% of women — compared to 67% of men — feel confident they’ll be able to retire when they want. This means that almost half of female respondents don’t feel confident they’ll be able to retire after the events of 2020.
Unfortunately, these fears likely aren’t misplaced. The toll the pandemic has taken on women’s finances and financial confidence isn’t likely to go away as things return to some semblance of normal.
Prior to the pandemic, the average American female worker earned about 81 cents compared to the average male worker. Economists predict that the pandemic will widen that gap for at least another decade, bringing the average female worker’s pay to roughly 76 cents to the average male worker’s dollar.
A large portion of this change stems from the fact that women are having to change their work schedules far more than men to accommodate for children being at home. A recent New York Times piece followed three American mothers working from home while caring for children. The piece showed just how much more of the burden mothers are taking on.
Women Are Staying the Course with Their Financial Plan
Women are less optimistic about their financial pictures both today and in the future. But surprisingly, they’re taking a more measured approach to how they change their financial plan during the pandemic.
Our study found that 56% of men compared to 34% of women were likely to buy new investments. At the same time, 44% of men and only 27% of women plan to sell investments during the pandemic. Finally, women reported they were slightly less likely than men to remove money from their workplace retirement plans. In other words, women are leaving their money where it is and staying the course.
So is women’s approach to investing a better one?
Historically, the stock market has recovered from every downturn in history. Despite the current volatility, history shows that the market will continue to go up. And while that’s not necessarily to say women will be more successful, there is some data to suggest that’s the case.
Tip: You can see how your investments would fare during a simulated recession using Personal Capital’s free, online financial tools.
A 2017 study by Fidelity Investments found that women investors generally outperform men by 40 basis points, which translates to 0.4%. And while it doesn’t seem like a significant difference, it can certainly add up over time.
One of the factors contributing to these higher returns is the measured approach women often take to investing. Women are far less likely than men to buy and sell investments frequently. So while there’s no way to predict the future, history does suggest that the patient approach that many women investors are taking may pay off.
Personal Capital compensates Erin Gobler for providing the content contained in this blog post. The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.