Women are the primary financial decision makers in 65% of nonretired households (43 million). The increase in the number of women as primary decision makers is a major development of the past two decades. The population of nonretired-women-headed households includes both single-women-headed households and married-women-headed households. Some households headed by nonretired women have dependents; others do not. Women's earnings are rarely commensurate with men's, even for women with a PhD. However, salary disparity influences single-women-headed households' financial decisions more than it does those of married-women-headed dual-income households. Going forward, women with postgraduate degrees will often outearn spouses without a similar degree.

Demographics

Young or mature, married or on their own, low-, middle-, or high-socioeconomic-strata nonretired women who head households are difficult to characterize meaningfully as a cohesive group because they represent over half of all US households.

• The mean age for nonretired-women-headed households is 45—the same as for all households.
• They have a mean annual income of $61K—less than that for all households ($74K) or for men-headed households ($82K).
• Roughly half of nonretired women who head households have some college or a college degree; another 13% have a postgraduate degree.
• About one-quarter are single (never married); one-quarter are divorced, separated, or widowed; and two in five are married.
• Almost half have dependent children; 12% have Boomerang Kids, and 12% are financially responsible for dependent adults. As a result, women are above average as part-time workers.
• About one-third are Millennials, and one-third are Gen Xers.
• Somewhat more than half (55%) own their home; for 30%, this home is their first. Their households are no more or less likely than all households to be in a city or suburb.

Financials

Income and cash flow constrain or enhance a household's ability to assume debt, save, and invest. In total, nonretired-women-headed households are conservative and careful. However, within this group are women who are savvy financial-decision makers, savers, and investors.

• Nonretired-women-headed households are just as likely as all households to own many basic financial products, such as US Savings Bonds and checking, savings, money market accounts.
• They are significantly less likely to own products such as custodial accounts, 529 plans, corporate or municipal bonds, and nontraded stock.
• Mean amounts of both assets and liabilities are less than those of men-headed or dual-headed households.
• About one-third have investment accounts; slightly more than one-third have $10K or less in an investment account; 30% have $100K or more.
• The majority (77%) consider a bank as their primary institution, but only 55% prefer a bank; 21% name a credit union as their primary financial institution, but 35% prefer a credit union.

Financial Attitudes and Interesting Tidbits

As is true of all populations that represent a large majority of households, financial attitudes of nonretired-women-headed households rarely differ from the norm (all households). Consequently, agreement with no one attitude is well above or below average.

• Only two in five households are satisfied with their household's current financial situation. About half (48%) enjoy managing their financial affairs.
• Slightly more than half (54%) are less worried about moving ahead financially than they are about just keeping up; two in five households agree that their household needs help in managing its financial affairs.
• Slightly more than one-third agree that "assisted-living or in-home-care insurance is important for households like mine."
• Two-thirds agree "the stock market is too risky for me."
• Over half will rely on Social Security for retirement income; four in five are concerned about having adequate income during retirement.
• Almost two in five nonretired-women-headed households prefer to take an average amount of risk for an average return on their savings and investments; almost one-quarter don't know how much risk their household is willing to take.

Implications

Women have made tremendous strides in the past three decades. Not until the 1980s, when an increased number of college-educated women entered the workforce, did many women earn an income; another two decades would pass before all but wealthy women could obtain a mortgage or credit card without a male cosigner. Now, more women than men are enrolled in college, women with postgraduate degrees outpace men, and the majority of households (including nonretired households) are headed by women financial-decision makers. Income disparity and longer life expectancy mean that women tend to be more conservative than are men—they take fewer risks—in financial matters.

Several additional factors make women different from men: Women continue to shoulder more household-maintenance responsibilities than do men, and they are more likely than men to experience disruptive life events such as child bearing and primary care-giving responsibilities. As more experienced shoppers, women rely on trusted brands and providers to save both time and money. For example, their preference for credit unions is a positive response to the trust that membership engenders and, when necessary, easy access to credit-union personnel—a personal relationship.

Longer life expectancy and greater responsibilities for others imply that many women will need to rely on their own resources—financial and other—for more years than will men. Women's timeline of financial needs is different from that provided by the typical financial advisor or institution for men. Long-view planning is a significant opportunity for institutions that can accurately identify, create, and deliver new products and services to address these differences.

To gain a clear picture of a population as large as that of nonretired-women-headed households, the group must subdivide on the basis of your institution's interest. Demographics such as age cohorts, life stage, income, and assets will likely suffice as a starting point. A further study of their behaviors and attitudes will provide insights for new-product development and marketing communications, for example. To profit from the growing market of women financial-decision makers, the most important step is to understand how to serve women meaningfully.

For a more in-depth look, contact CFD.