Women Became More Financially Proactive During the Pandemic — What It Could Mean for the Future
Women — who bore the brunt of the pandemic financially, per a previous GOBankingRates report — were significantly more optimistic about their financial outlook in 2021 as compared to 2020, according to a new Nationwide study. In turn, they have become more proactive with their finances and have started thinking further ahead about their financial futures.
The Nationwide Retirement Institute’s Advisor Authority Survey found that 49% of women investors felt optimistic about their financial outlook in 2021 as compared to 32% of those polled in 2020.
The study notes that women are being extremely proactive and are planning ahead, as 72% of female investors have a strategy in place to protect themselves from outliving savings. A full 83% of female investors polled have a strategy in place to generate guaranteed income in retirement, and 59% have a strategy in place to help protect assets against market risk.
In addition, due to experiencing first-hand how market volatility can significantly impact their portfolio, 68% of women investors will more conservatively revise their investing strategy, and 73% will revise their investing strategy to be more actively managed, per the study.
Given new economic and geopolitical challenges, it is not yet clear whether this trend will continue, but women investors have honed their skills during the pandemic to help them navigate turbulent times.
Ann Bair, SVP of marketing for Nationwide Financial, told GOBankingRates that rising inflation, increased market volatility — and now the war in Ukraine — have likely dented optimism for many investors.
“The fact that female investors are embracing protection solutions and working with advisors and financial professionals to build and fine-tune their financial plans should help them feel more confident weathering storms like we are experiencing now,” said Bair. “It will be interesting to see how this affects their long-term view, but when you have a good plan in place, it’s easier to look past near term volatility.”
Further, the study notes that women investors are not taking their experiences living through the COVID-19 pandemic (or other financial crises) lightly.
“We’ve seen women investors turn experience into action,” Bair said.
She explained that women are building long-term strategies to ensure income in retirement and protect against outliving their savings — as well as taking shorter-term actions like starting rainy day funds and following a monthly budget.
“Two-thirds of women investors we surveyed work with a financial advisor and say that helps them feel like they can make the right investment decisions even during a financial crisis,” she said.
The study also found that female investors have already demonstrated a stronger likelihood (as compared to male investors) to make better long-term decisions when facing financial crises. For example, fewer female investors (8%) than male investors (15%) liquidated assets from qualified retirement savings plans — a smart decision given the long-term consequences that can occur when pulling money out of your retirement savings.
“It’s natural to have an emotional reaction to jarring headlines,” Bair said. “Today we’re reading about inflation spikes, supply chain disruptions and, unfortunately, now a war in Europe. As a result, we’re seeing investment markets swing wildly, creating anxiety for anyone checking their 401(k) balance. The worst thing you can do is make a quick decision that’s bad for your long-term plan like selling assets at market lows based on a short-term market event. Investors who shut out short-term noise and stick to their long-term plan will have a distinct advantage.”
Another key finding of the study is that 64% of women investors work with an advisor, and the main reason they do so is to feel more confident in their financial future (with 40% of respondents citing as much).
Bair said that she doesn’t find this surprising, as no one should feel like they have to go it alone when planning for retirement.
“By doing so, you’re limiting the perspective and expertise you can receive by working with someone who thinks about retirement security all day long and has a track record of helping others achieve their long-term goals,” she noted.
On the other hand, Bair found it surprising to see how much financial optimism had increased when considering the attitudes of women investors in 2021, especially following the unprecedented events that roiled markets in 2020.
“Their optimism improved by 17% year over year, which is a significant jump. Likely, they are feeling more confident now that the worst of the pandemic is behind us. Those who kept their cool following pandemic-induced market volatility saw their 401(k) balances bounce back nicely by the end of the year. I think that experience boosted their confidence by showing that they can make it through tough stretches and get back on track when the next financial crisis emerges,” she concluded.