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It’s Different for Women: Part 1 Thumbnail

It’s Different for Women: Part 1

By Maria Motsinger and David Cantor

As investors, women have to deal with challenges that are different from those facing most men. 

Unequal pay1, limited employment opportunities, and glass ceilings often reduce their lifetime earnings. The demands of pregnancy and childcare, most recently evident during COVID when women sacrificed work opportunities to care for homebound children in far greater numbers than their male partners, further widen the economic gap. Womens’ healthcare costs also tend to be higher, and because of a longer life expectancy, their assets need to last longer. 

The result is that women, especially women of color2, are at greater risk of poverty than men in almost every developed country.  Divorced, widowed, and unmarried women are most severely impacted.3 Almost one-quarter of single mothers in the US live below the poverty line. 

And the gap compounds over a lifetime, meaning women end up with fewer resources and savings than men. The average old-age poverty rates for women and men in the 38 countries of the OECD are 15.7% and 10.3%, respectively. In the United States, 13.2% of women 75 years and older live in poverty compared with 8.8% of men the same age.4

Among affluent Americans, some encouraging trends are evident, with more women attaining higher education than men and a growing cohort of matriarchs taking control of family finances. But even wealthy women should consider tailoring their investment plans to provide for their specific needs, whether they are individual investors or they invest with a partner.

We break down some strategies that women should be aware of.  


Perhaps the most important thing any person can do to secure their retirement is to save and invest. Pay into Social Security, participate in employer retirement plans, contribute to a personal retirement account, and build an investment account with any extra income that can be saved. 

These steps are all crucial, and for women even more so because of their longer life expectancy and the economic obstacles they face.

Choice of investments counts too. While there is a lot of conflicting data on differences between men and women in their preferred investment styles, one thing is clear – women tend to hold more cash than men do. Women on average hold 37% of assets in cash, compared to 25% for men. However, a money market fund should not be considered a long-term investment strategy for the bulk of your assets. 

There are a lot of ways to create an investment strategy that can provide long-term growth and still maintain a comfortable risk profile. Money market funds have their place, for instance, to hold your emergency cash or to pay for a short-term goal. But when you’re making a plan for retirement, a diversified portfolio of stocks, bonds, and other asset classes is essential to generate the growth of capital necessary to fund retirement.

Moreover, choosing socially responsible or “ESG” funds can be one way of using your investments to help change the economic hurdles faced by women. Some funds invest specifically in companies with employment policies and products that benefit women. Many ESG funds engage in shareholder activism to promote gender parity issues such as equal pay, representation of women in company management and boards, and parental leave policies.

Match Your Risk Profile to Your Life Expectancy

Because women have a longer life expectancy than men, it’s important to match your investment risk profile (and therefore the growth potential of your investments) to your life expectancy, to minimize the potential problem of running out of money. Because they live longer, women may be able to take more risks at different stages in their journey compared to men. 

It’s helpful to know your life expectancy, which depends on your date of birth. You can find it here: https://www.ssa.gov/OACT/population/longevity.html

If you’re still working, you’ll most likely be doing most of your savings in a personal account, so matching your investments to your life expectancy is straightforward.

If you’re married and already retired, depending on how you structured your retirement accounts, you may want to consider setting aside some part of your joint household assets into separate buckets tailored to each of your life expectancies.

The Bottom Line

Women face unique institutional and social challenges when it comes to building wealth. Saving and investing money to fund retirement is crucial. Moreover, women have specific needs when it comes to creating a successful retirement plan. But, it doesn’t have to be difficult or confusing to develop an investment strategy that considers these needs. 

In our next article, we’ll look at some other tactics that women may find helpful in their long-term financial planning.


1 Based on 2018 U.S. Census Bureau data, women working full time, year-round earn an average of 82 cents for every $1 earned by their male counterparts.

2 For every $1 earned by white, non-Hispanic men, Latinas earn 54 cents, AIAN women earn 57 cents, Black women earn 62 cents.

3 https://www.epi.org/publication/retirement-in-america/

4 https://www.americanprogress.org/issues/women/reports/2020/08/03/488536/basic-facts-women-poverty/

The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.

This content not reviewed by FINRA