Girls just wanna have financial security
Michelle Wie competed in the quarterfinals of the men's U.S. Amateur
Public Links Championship earlier this month, she captured the attention
of golf enthusiasts everywhere, but not necessarily their support.
Some men groused that she shouldn't compete against their brethren
on the grounds that she doesn't have the muscle mass to be on a
level playing field. Even commentator Frank Deford made this point
National Public Radio.
Heck, she can drive a ball 300 yards and play under par. It's not
really her muscle mass they're concerned about. It's their fragile
male egos, which can't endure the sight of grown men getting whipped
by a 15-year-old girl.
Women, on the other hand, have one message for Michelle Wie: You
The income disparity
When competing against men in the investing arena, women have a
significant handicap. They make less money. While overall the wage
gap has narrowed, it's still significant: For every dollar earned
by a man, a woman makes about 80 cents, according to the most recent
numbers available from the Labor
Department's Bureau of Labor Statistics. The disparity is greater
for women in the 45- to 54-year-old age group, with an earnings
ratio of 73 percent, or 73 cents on the dollar.
So when gender-comparison studies come out with findings that women
have less confidence about their retirement savings than do men,
I can't help but roll my eyes. How can they be confident when they're
not on a level playing field?
For instance, more men than women say they have saved
or are currently saving for retirement, according to the 2005
Retirement Confidence Survey, recently released by the Employee
Benefit Research Institute and Mathew Greenwald & Associates.
"However, this difference appears to be largely driven by
differences in household income between men and women," according
to the study. "When income is held constant, men and women
appear equally likely to say they are saving for retirement."
See what I mean? That survey provides other interesting
statistics, but it is based on 20-minute phone interviews with about
1,250 Americans and focuses more on investor attitudes than on actual
hard data about their portfolios.
Men's portfolios bigger than women's
Small Business Retirement Survey is based on information from
601 U.S. businesses and some 1,200 full-time employees. This study
reveals that women aren't as prepared as men are for retirement,
with numbers to back that up. Even though both men and women start
saving at roughly the same median age (27), and even though three-fourths
of both sexes participate in a company retirement plan, women lag
men in important ways. According to the study's findings:
- Women contribute a median of 6 percent of their paycheck to
their retirement plans vs. 7 percent for men.
- Women spend five hours a year managing their retirement accounts,
half as much time as men.
- Women have accumulated significantly less retirement savings
($71,800 vs. $122,700 men). Women also profess to know less than
they should about investing (80 percent vs. 67 percent men).
- Even though they tend to live longer, women underestimate their
retirement needs vis-a-vis men -- $639,000 vs. $941,000 for men.
Some quick-and-dirty calculations validate the first
and third points. If a woman earns $36,500 on average and tucks
away 6 percent (or $2,190) of her annual pay into a retirement fund
earning 7 percent a year, she will have saved $74,458 after 18 years
-- not far from the $71,800 figure. Meanwhile, if a man earns $50,000
and puts aside 7 percent ($3,500), using the same assumptions, he
ends up with $118,997 -- close to the $122,700 figure. These calculations
don't take into account pay raises and other occurrences that may
change contribution levels, but they serve to show that this study
accurately reflects the retirement realities women face.