New Study Provides Answers About Financial Wellness Gender Gap

A recent Bank of America study¹ confirms that there is a substantial gender gap regarding financial wellbeing. 

The definition of financial wellness according to Enrich is "The knowledge, ability, and desire to make intelligent financial decisions, as well as having the capacity to live a happy life within one’s means."

In essence, financial wellness encompasses a person’s relationship with money, including:

• Current financial situation, budgeting, money attitudes and habits, financial stress, etc. 
• Future financial security, including emergency savings, financial plans to meet goals, retirement goals, and more.

To learn more about Financial Wellness check out, What is Financial Wellness?

Unfortunately, women trail men in both areas.

Based on the survey’s 100-point scale measuring financial wellness, men score an average of 67 points—a full 9 points more than women. 

Reasons for the gap include:

• Statistically, women live longer and will need more money to retire.
• Women are more likely to leave the workforce for periods of time to be caregivers for children, spouses, and parents.
• The gender wage gap, where women earn less than their male counterparts.
• Women tend to invest less.

In fact, there is only one area where women exceed men in financial wellness: Protection of assets.

Typically, more women have the right legal documents in place, such as a will, power of attorney, health proxy, and living will.

According to the report, women lag behind in all other areas:

• Managing expenses
• Managing credit card debt
• Managing long-term debt
• Planning for the unexpected
• Preparing for retirement

Planning for the Unexpected

Unexpected costs include items such as home repairs, car repairs, and medical bills.

And when it comes to medical bills in retirement, according to the latest numbers², women have to have a whopping $14,000 more saved for their expenses than men. 

Despite these numbers, women are not prepared for future healthcare costs. 

The BofA survey found that:

• 74 percent more men than women have a health savings account.
• Men save 32 percent of HSA money compared to women who save 27 percent.
• Men’s HSA balances are 49 percent higher than women’s
• 75 percent more men invest HSA money in the market for growth

This is unfortunate since the HSA has many advantages for women.

For instance, the money in an HSA is portable. If a woman changes jobs due to caregiving duties, she can take her HSA with her. Additionally, she can continue to contribute to her HSA even during times when she is not employed.

Related article: HSA Course Teaches Employees How to Get the Most From Their HSA

Preparing for Retirement

The BofA survey also found that women are not as prepared for retirement as men. Overall, retirement accounts grew from $74,000 to $81,000 between 2019 and 2020. 

However, when broken down by gender, men’s accounts grew to $98,000 while women’s only grew to $62,000 – that’s 40 percent less despite living longer and needing more. 

Other numbers to note include:

• 6 percent more men participate in company 401(k) plans
• Women take more hardship loans from their retirement savings plans
• Women contribute less pre-tax money (6.2 percent) to their 401(k) than men (6.8 percent)

Related article: Empower Employees to Prepare for Retirement with New Course

Financial Wellness Benefits Can Help

A holistic financial wellness benefit can help all employees achieve their short- and long-term financial goals.

Such a benefit can:

• Assess your employee’s current financial situation
• Teach employees financial information
• Provide employees with actionable steps and tips
• Help employees gain healthy financial habits
• Track employee financial progress
• Promote emergency, medical, and retirement savings
• Create positive financial behavior change

Financial wellness programs like Enrich can help women create and maintain a budget, reduce credit card and long-term debt, invest wisely, save for emergencies, and plan for retirement.

As women gain an understanding in these areas and companies work to accommodate the unique situations women face, the financial wellness gender gap is sure to get smaller.

1 - https://business.bofa.com/content/dam/flagship/workplace-benefits/id20_0903/documents/Financial-Life-Benefits-Impact-Report-2021.pdf

2 - https://www.reuters.com/business/healthcare-pharmaceuticals/soaring-retirement-healthcare-price-tag-calls-some-careful-planning-2021-05-13/