Issue: 197
Sent: 27-01-2010 13:05:12
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Gender is alive & well - Part 1.
Lester Wills
Those who are familiar with my work will know that I have written extensively about gender differences, especially when related to investment approaches adopted. In particular when this relates to retirement saving. In fact this was one of the variables I tested in my Doctoral research when looking at the dynamics of the retirement savings decision. Along with many other researchers, I confirmed that many women are more vulnerable to poverty later in life than their equivalents of the opposite gender.
A recent report entitled "GENDER GAP: Women & Retirement...all is not equal" from the ING Institute for Retirement Research in the US noted that; "The Gender Differences Model, which argues that males and females are vastly different psychologically, dominates the popular media". However, Janet Shibley Hyde, writing in the 'American Psychologist' supports the gender similarities hypothesis, i.e. that males and females are similar on most, but not all, psychological variables. She reveals results from a review of 46 meta-analyses that support the gender similarities hypothesis. Hyde argues that gender differences can vary substantially in magnitude at different ages and depend on the context in which measurement occurs. Overinflated claims of gender differences carry substantial costs in areas such as the workplace and relationships
According to the ING Institute for Retirement Research report, the genders are similar, but not the same. The report examines data in the context of retirement, and focuses on some of the differences in terms of retirement investment behavior and results. They do accept however that Hyde has a point, as there is much similarity between the genders with respect to these behaviors and behavioral trends.
They accept that many Americans - of both sexes - fail to adequately invest for retirement, or that they do not invest wisely when it comes to asset allocation (I would argue that such behaviour is not the sole prevue of Americans). However, such behaviour patterns are often more pronounced in women (who tend to live longer and need their resources to last longer) - and therefore the potential for an income gap in later years is significantly greater for women than for men.
As the authors of the report note, women are a dominant force in the U.S. Economy, given that:
- 51% of Americans are women
- By 2010, women are expected to control $1 trillion or 50% of the country's wealth and 2/3 by 2030
- Women purchase or influence the purchase of 80% of all consumer goods, including cars, stocks and computers
- Women hold 50% of professional jobs
- Women own 55% of new business startups
- Women are earning more as they now occupy 50% of all professional jobs.
- Women are making more major purchases, as 21% of home buyers are single women.
- Women are starting more businesses with 56% of new business startups
Yet, women are at a distinct economic disadvantage when it comes to retirement as:
- Women are likely to receive less from other sources.
- Women tend to earn less than men as statistics show that women get 81c for every $1 men earn.
- So they receive less from Social Security, i.e. women average 26% less than men.
- And are less likely to get a pension with only 28% of women actually earning a pension in the US.
- But as we all know, they need their money to last longer as an average 65-year-old woman will live to age 85 compared to 82 for a man.
As the authors of the report note, the importance of personal investment in building retirement income has never been greater for both men and women. However, the challenge, let alone the need to build
retirement assets, is greater for women. Yet women tend to demonstrate plan participation behaviors that put them behind men when it comes to accumulating those assets.
I will continue with this theme next time.
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