Do men and women differ in their retirement savings strategies? Are Men from Mars and Women from Venus when it comes to deciding on how and where to invest their savings?
According to a recent survey from Wells Fargo, there are differences. They found, for example, that 49 percent of men had enrolled in a company 401(k) plan, compared to 43 percent of women. 70 percent of women met the minimum recommended level of portfolio diversity against 67 percent of men.
Some studies claim there is a difference in saving along gender lines. A 2010 study from the Boston Consulting Group found that women prefer to focus on longer-horizon planning, such as college savings. Men tended to be more competitive and thrill-seeking, concentrating on the short-term track records of their portfolios.
A survey by LPL Financial, showed women tended to be more patient as investors, and would usually consult with their advisors before changing their portfolio. A more recent Prudential study also found that women are more receptive to financial research and advice than men.
Still, what does all this information say about the different ways men and women invest? Nothing at all, according to Josh Mellberg, founder and president of J.D Mellberg Financial.
“In my experiences, men and women do not invest differently, but every person’s investment strategy is wildly different,” he says. “Some people want their portfolio to grow only 2% per year while others are looking for 15-20% growth. I think it depends more on the person instead of on the gender.”
Given that the statistical differences between men and women seem so marginal seems to justify Mellberg’s contention that the decisions are influenced by the character of the individual, not the gender. What is important is that expert guidance is given on which investment and insurance options make the most sense for a given client’s unique circumstances.
What is not in dispute is that both genders have benefited from the large increases in stock market gains over the past two years. Although there has been a significant increase in 401(k) balances, there has also been a corresponding increase in 401(k) loans. Some 20 percent of participants now have an outstanding loan balance on their retirement account, an increase of more than 5 percent in the past two years. Around a quarter of workers who left their jobs last year decided to cash in their 401(k) rather than leave it in the plan, or transferring it to an IRA.
Although the issue of the differences between men and women in their financial outlook may be in dispute, the objective of financial planning and retirement advisory firms is simple.
According to Josh Mellberg of J.D.Mellberg Financial, the only concern for investors, male or female, should be to ensure that people, primarily through the use of annuities, have enough money to retire and live comfortably for the rest of their lives.