More than a quarter of newborn girls born today are expected to live until the age of 100, says the U.K.’s Office for National Statistics, but will any of them make the right investment moves so that they’ll be able to live comfortably well into old age?
Not likely, said the latest study from financial services company Fidelity International, which found that almost half of women over the age of 55 describe themselves as “cautious” when it comes to taking risks like investing money.
That’s compared to women between the ages of 18 and 34, 15% of whom reported feeling confident about their investment approach, while 11% said that they felt outright ambitious.
Over a quarter of younger women (26%) also said they’d be willing to invest in stocks and shares ISA, and 11% reported that they’d invest in peer-to-peer lending.
Upon first glance, Fidelity’s stats seem to suggest that younger women are more willing to take on financial risk than their older counterparts. And, given that investment is a widely recommended strategy for making the most out of your savings, the takeaway that probably registers is that older women would be wise to step out of their comfort zones — and soon.
But, take a closer look at the numbers, and you’ll realize that they don’t do the best job at backing Fidelity’s young-versus-old narrative.
Almost half of women over the age of 55 are “cautious” when it comes to taking financial risks? Does that mean that more half of women over the age of 55 potentially feel… fine about those same risks?
In addition, the number of younger women who reported feeling confident (15%) and ambitious (11%) about investing is not awfully high. These low percentages leave a lot of room for other responses, including feeling less confident or even “cautious” about taking financial risks. (Another possible response? “Terrified.”)
Fidelity additionally frames the difference between younger and older women as a symptom of aging. “Risk taking and youth may be synonymous, but exploring why interest in investment drifts as we age is key,” said Maike Currie, Fidelity’s investment director.
But, if there actually is any difference between how younger and older women choose to build and use their savings, it seems that generational factors would play a much larger role in shaping that gap than any fixed correlation between age and level of openness to financial risk-taking.
Women who are currently between the ages of 18 and 34 came of age under different circumstances than women over the age of 55. Today, the gender pay gap is lower than it was several decades ago, adults are likely to stay single — and therefore solely responsible for their own financial decisions — longer than they had in previous generations, and women are less likely to have children.
All of these factors shape how women approach money and savings. Prolonged practice with managing your own money will make you more confident about how to use it. Having zero dependents doesn’t necessarily mean you have more money — especially since younger generations generally carry higher levels of debt than boomers — but it does mean that more of what you make goes towards yourself, and not someone else. And taking risks like investing is generally more appealing when it’s only your future — and not someone else’s — that’s at stake.
Currie credited older women’s supposed aversion to risk to something she called the “‘Bag Lady Syndrome’ — the fear of running out of money, losing your home or ending up destitute,” she explained. “In fact, this is the most documented fear among women nearing retirement age. Women worry more than men about their financial security — a worry that seems to compound with age.”
But, it’s possible that these fears exist because of circumstances that are more likely to affect women than men — say, lower pay and domestic violence — and that’s something that needs to be accounted for, too.