This Week In Your Wallet: Women Have Saving & Investing In The Bag
On the (high) heels of Iliza Shlesinger’s Netflix special, Freezing Hot, in which she calls out women for relying on men for things like finding a car in a crowded parking lot or giving them the daily weather report, new research suggests women needn’t rely on men for two very important things: saving and investing.
For starters, women are saving more than men. According to Fidelity Investments, women are socking away 8.3 percent of their salaries, compared with 7.9 percent for men. This might not sound (or look) like much of a difference, but it amounts to hundreds of dollars a year, and potentially tens of thousands of dollars down the road.
A different piece of research highlights why women are better investors than men. We know from Terrance Odean and Brad Barber’s seminal piece of research that women outperform men annually by about 1 percentage point. Betterment, a computerized portfolio manager or “robo-advisor,” looked at the accounts of around 60,000 investors — about one-quarter of them women — and saw that female investors signed into their accounts 45 percent less frequently and changed their asset allocation 20 percent less frequently than male investors did. In other words, women are more hands off — and that serves us well.
Given the above, I took to my Fortune column to ask the question: If women are saving and investing rockstars, then why is that we are we lagging behind when it comes to saving and investing for retirement? The answer? When women invest, they do better — but too many women don’t. Female or male, I offer some suggestions for becoming a stronger saver and investor here.
The more you’re saving now, the less you’ll need
One oft-stated rule of thumb for retirement planning is to aim for a retirement income equal to 80 percent of your final salary. New research suggests otherwise. A survey conducted by Baltimore’s T. Rowe Price Group looks at 1,507 recent retirees with a median net worth of $473,000. They’re living on an average of 66 percent of their preretirement income, and over half of the respondents (57 percent) say they’re living as well, if not better than they were before retirement. The Wall Street Journal’s Jonathan Clements presents the case for why you might need less money than you think.
First of all, the 80 percent replacement ratio already assumes you can live on less in retirement. You’re no longer putting 10 (or so) percent away a year…for retirement, you’re no longer making an employee’s 7.65 percent payroll-tax contribution to Social Security and Medicare and your federal income-tax bill will likely be lower. You’ll also save on taxes when a good portion of your income is coming from Social Security benefits. Clements adds to the list that the kids will (hopefully) be off the family payroll come retirement, your mortgage may be paid off and if you were saving more than 10 percent, then you’ll need less overall. He calls it one of the great financial ironies: “The more you save, the less you need for retirement.”
Maximize utility, minimize risk
This week in your wallet: What’s in it? Seriously. Open it up, survey its contents and see if you have any of the following: Social Security card, Medicare card, notes/cards that have PINs or passwords, voter registration card, passport or checks. If you’re regularly schlepping around one or more of the above, then consider your wallet an identity thief’s dream. As DailyFinance reports, these six things are better left at home.
Sit ups for savings
Would you wear a Fitbit to get an insurance discount? It’s the big question in the world of insurance this week after life insurance company John Hancock announced its partnership with Vitality. If you enroll in the partnership’s new and optional wellness program, John Hancock will send you a free Fitbit monitor — wear it and you can get a discount on your life insurance of up to 15%. As CNNMoney reports, this is the first time an insurance company is offering a discount for tracking your health, location and body. Once you opt in and have the monitor on your wrist, the insurance company will know when you do a push up, how far you run or when you skip the gym for a couple of days. The system works like any other “customer rewards” program in that the more you use it, the more points you earn. There will be three levels: silver, gold and platinum. The healthier you are, the higher you go and the more you save. 
Have a great week,
Jean
