The majority of women have emerged as primary breadwinners, whether they like it or not, according to Prudential Financial’s (NYSE:PRU) latest biennial study on the “Financial Experience & Behaviors Among Women.”
The study, in its 12th year, finds that 53 percent of the more than 1,400 women surveyed are primary breadwinners, with increasing numbers of women assuming this role as a result of partners losing jobs during the financial crisis, divorce, and women deciding to marry later.
The results of the survey, which was significantly broadened in 2012 to include women of all income levels, larger representation of women from diverse backgrounds, and comparative data on men’s financial attitudes, also shows that, despite their role as breadwinners, only 20 percent of these women feel well prepared to make financial decisions, compared to 45 percent of men.
“While our past research focused on women who are primary or joint financial decision makers, this new data shows that, consistent with demographic trends and reflecting the impact of the financial crisis, the majority of women today are financially responsible for generating their own and their families’ income,” said Susan Blount, senior vice president and general counsel, Prudential Financial. “The study shows that with women in more control than ever of their finances, they face significant challenges when it comes to financial decision making, and admit to a lack of knowledge about financial solutions that can help them.”
The research highlights that women have been affected by the financial crisis to a greater extent than men, with 70 percent saying they have lost ground. Of particular concern is that about 30 percent of women surveyed report they are struggling to make ends meet, or are no longer able to keep up with expenses. Around 30 percent of women say they’ve experienced a layoff in their household as a direct result of the economic downturn. That said, women are surprisingly positive about the future, with nearly 40 percent saying they are optimistic about the country’s economic prospects. More men (24 percent) than women (16 percent) report being very pessimistic about the economy.
While the majority of women reported being primary breadwinners overall, approximately 22 percent of women who are married or living with a partner report being the one who makes the most money. This varies greatly by race, with 33 percent of Asian American and 31 percent of African American married women being the higher-income earners, compared to 19 percent of white women. Female breadwinners are more likely to say they maintain completely separate financial accounts and investments from their spouse. Underscoring a gap in financial knowledge, only 10 percent of female breadwinners feel very knowledgeable about financial products and services, and are only half as likely as men to feel well prepared to make wise financial decisions.
The study shows that the financial styles and priorities of women differ from men. Married/partnered women are more likely than their male counterparts to say they share financial decision making equally (35 percent vs. 21 percent), and married men are far more likely to say they are taking control of financial decisions (38 percent) than married women (19 percent). Women worry most about household expenses, debt, and their ability to save for retirement. In comparison, men are more focused on external factors such as the state of the economy, followed by household expenses and retirement. Women are also more concerned than men about becoming a burden to their families and are more risk averse, as well. This is particularly true for African American women.
At a time when women are taking greater responsibility for their own and their families’ finances, the study shows that women earning $50,000+ have become less confident about maintaining their lifestyle in retirement since Prudential began collecting this data in 2004. The gap between the importance of this goal and confidence they can meet it has increased from 62 points in 2008 to an all-time high of 69 points in 2012.
“It is concerning that so many women do not feel they have the information they need to make the necessary decisions to help secure their financial futures,” said Christine Marcks, president of Prudential Retirement. “Whether the financial services industry or advisors like it or not, given women’s key role as primary breadwinners and financial decision makers, there needs to be greater emphasis on supporting women’s financial needs and helping them plan for a secure retirement.”
The research also underscores women’s receptivity to working with financial advisors. In fact, 35 percent of women say they use an advisor, which is slightly higher than men’s reported use (33 percent).
Women who work with advisors are more likely to report being on track for meeting their retirement goals and are more likely to collaborate and seek the advice of an advisor than men; although for both men and women, a relatively small percentage say they generally base their decisions on the recommendation of their advisor (15 percent of women and 12 percent of men).
More than a third of women who do not use an advisor say they would consider doing so. Younger women with higher incomes, along with African American women, say they are more likely to want to consider using an advisor, with perceived cost as the main reason for not using a financial professional.
The study demonstrates significant differences in financial priorities by ethnicity and geography, underscoring the importance of understanding the needs of different communities. The study also shows significant generational differences in attitudes toward finances. Specifically, women under age 35 are more likely to feel as though they are in the driver’s seat when it comes to financial decision making, and a significant number (42 percent) recognize that they need to be in charge of their financial goals. Despite this, women under 35 face significant challenges with high unemployment, relatively low financial product ownership and limited financial knowledge.
Younger women are more likely than baby boomers to identify themselves as investment beginners and are less likely to say they are well prepared to make wise financial decisions than boomers. Surprisingly, however, boomer women are nearly as likely as their younger counterparts to say that they are way behind or haven’t started planning for retirement (41 percent vs. 48 percent), further demonstrating that most women are very concerned about their retirement security.
Prudential’s 7th biennial study of the “Financial Experiences & Behaviors Among Women” polled 1,410 American women and 604 American men between the ages of 25 and 68. A copy of the report, educational information and resources are available at www.prudential.com/women.As seen in Burlington County Woman