Each day, families across the United States grapple with challenging decisions related to budgeting, spending, insurance, investments, savings, and retirement, among other financial considerations. In navigating these choices, possessing financial literacy—knowing how to make informed decisions about money—is crucial.
However, overall financial literacy levels in the United States are suboptimal, with recent research indicating that women tend to be less financially literate than men, irrespective of factors such as educational attainment, income, or marital status.
As a social scientist specializing in aging and the social safety net, I participated in an extensive analysis focusing on the financial literacy of older women. Our findings revealed that, on average, men’s financial literacy scores surpassed those of women by 25%, despite both groups demonstrating no disparities in math skills or overall cognitive ability.
The financial literacy gender gap was even more pronounced among Black and Hispanic women, with scores averaging 40% to 45% lower than those of white, non-Hispanic men.
This gender disparity becomes particularly problematic as women age. Given their longer life expectancy—almost six years more than men—and earlier exit from the workforce, women often face extended retirement periods. Compounded by family-related career interruptions and concentration in lower-paying jobs, women frequently find themselves with insufficient retirement savings.
For instance, in 2020, women working full time earned a median of $891 per week, compared to men’s $1,082. These career interruptions, lower earnings, and premature retirements contribute to female Social Security recipients receiving only 80% of the benefits allocated to men.
While financial education cannot fully remedy the effects of decades of structural inequality, evidence suggests that it can play a significant role in empowering women to make more informed decisions about their financial future.
The demand for financial education is substantial, as revealed by a survey conducted in 2022 among women aged 40 to 65. Shockingly, only 16% of women in this age group have ever received any form of financial education, dropping even lower to 8% to 10% among African American, Native American, and Asian American women.
The survey highlighted inconsistent financial behaviors among respondents that contribute to financial insecurity. Nearly 30% never allocate funds to an emergency fund or savings account, almost 40% never contribute to an investment or retirement account, and a significant 60% have never engaged with a financial professional. Notably, only 20% expressed feeling at ease about their financial future.
Despite these challenges, there is a silver lining. Over 70% of women in the survey expressed a keen interest in receiving financial education, with particularly high demand among Hispanic/Latina (93%), Black (85%), and Asian American (80%) women.
Survey participants indicated a desire for education tailored to long-term planning and issues specific to their life stage, moving beyond general money management principles. They also emphasized a preference for flexible programs accommodating busy schedules and delivery through trusted community agents like schools or community centers.
Presently, there is a shortage of financial literacy programs specifically designed for the needs of older women. However, this research provides a roadmap for future programs. Employers, financial service providers, community groups, and national organizations all play pivotal roles in empowering older women with the desired and necessary financial literacy skills.
