Men tend to focus on the numbers when doing their retirement planning, and women are more likely to plan for retirement based on their lifestyle goals, according to new research.
A study by Ameriprise Financial and Harris Interactive found that men outpace women in planning for the financial aspects of retirement at a ratio of 77% to 72%. Women are more likely to say they have thought about what they would like to do during retirement, however.
Only 22% of Americans report confidence in reaching their retirement goals. Men are significantly more likely than women to express this confidence, 25% vs. 19%.
“Financial preparation can help instill confidence in reaching your retirement goals—and rightfully so—but thinking about how you'd like to spend your time and where you’re going to live can have a dramatic impact on your overall readiness,” said Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial, in a statement. “The activities you plan to pursue during retirement will likely have associated expenses. Failing to consider these can have significant consequences.”
Fifty-four percent of men reported setting aside money in their own investments, such as stocks and IRAs, compared to 46% of women who say they have done the same. Men are also more likely than women to report that they've determined the amount of income they'll need in retirement, at a ratio of 31% to 20%. This additional financial preparation may be one reason why men are significantly more likely than women to say they feel on track for retirement (41% compared to 34%) and express confidence in their overall financial future (22% compared to 16%).
Women are more likely to report that family and health taking a prominent role in their planning. Women are significantly more likely than men to say they plan to spend more time with family during retirement (41% vs. 34%) and that proximity to family is a very important factor in determining where they will retire (40% vs. 27%). They are also more likely than men to place importance on their proximity to friends and other retirees (21% vs. 13%).
Women also placed greater emphasis on maintaining their health as they age. More than half (54%) are making plans to ensure they stay healthy during retirement, compared to 48% of men. Women are also more likely to rate access to health care options and facilities as a very important factor to consider when deciding where to retire (38% vs. 32%). Women are also more likely to say they have spent time determining how they will rest and relax in retirement (25% vs. 19%).
While men and women are preparing differently, they both may be dramatically underestimating how long they will need to live on their retirement savings. Those surveyed estimate that they will spend approximately 17 years in retirement while most financial professionals recommend accumulating enough savings for a 30-year retirement.
Michael Cohn writes for Accounting Today.