The Vicious Cycle Threatening Women’s Financial Futures

Financial literacy efforts can help women avoid developing paralyzing fear that often then spirals into inertia.

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Fear can be shaping women’s financial futures more than they know.

The anxiety that women of all ages hold around investing money can lead to an inertia that keeps them from making essential investment decisions, panelists told participants gathered at the Century Summit V session, held last week in collaboration with the Stanford Center on Longevity.

“Some of this lack of confidence becomes fear. And fear prevents women from acting,” said Annamaria Lusardi, senior fellow at the Stanford Institute for Economic Policy Research and a professor at the Stanford Graduate School of Business. “It’s good that women are more cautious. But it’s bad that when it comes to investing, they are less likely to act.”

Lusardi was one of three speakers on the panel, “Gendered Ageism and the Challenges of Financial Security,” held at Stanford University in Palo Alto, California.

“A sense of inertia can come from the fear,” added Kerry Hannon, a senior columnist at Yahoo Finance, who moderated the session.

This fear means women may be less likely to invest in the stock market, which they must do grow their earnings, said Lusardi. She added that financial literacy is essential in order to ask the correct questions to any financial advisor. “The world has become very complex and we need to navigate and acquire a little bit more skill and confidence so that we can take actions.”

What is Underneath the Inertia

Panelist JoAnne Moore, vice president of thought leadership and content at Corebridge Financial, said the company is trying to understand this inertia and how to motivate people. Research shows that it’s difficult for people to take action on something that won’t show rewards for more than 10 years, she noted.

The industry needs to understand peoples’ specific situations and provide the services and financial guidance they need. “Honestly, we say everybody should meet with one (financial professional). But there aren’t enough in the world for everybody to have a financial professional,” said Moore. To assist, the financial advisory industry can use digital tools and multi-dimensional approaches to meet people where they are in their lives, she added.

A public company that offers wealth management, annuity and life insurance products, Corebridge Financial is the holding company for American International Group’s (AIG) former life and retirement business.

More Obstacles

Hannon added that women can face greater difficulties in saving for retirement if they leave the workplace to raise children or provide caregiving services. “That brings women an obstacle that many men don’t encounter. Though that is changing a bit,” she added.

Cindy Hounsell, founder and president of the Women’s Institute for a Secure Retirement (WISER), said the institute’s National Resource Center on Women and Retirement offers women the financial foundation many are searching for. “They hear all these terms and all the things that they should be doing, and yet they don’t have access to the funds or the plans that will help them to start.”

Based in Washington D.C., WISER is a nonprofit organization founded in 1996 to improve opportunities for women to secure retirement income and educate the public about the inequities that disadvantage women in retirement.

Women Need to Bargain

While new pay transparency laws may help curb the sustained pay gap between men and women, the panelists agreed that women have to advocate for themselves and ask for promotions and higher salaries.

“It is incredibly important for women to bargain, to bargain their salary from the first to the last,” said Lusardi. “I just moved to Stanford a year ago, and I am already thinking I should have asked for more,” she said, noting that women are going to be paid less and this factor compounds along a woman’s life.

Data indicates (she did not say what) women will earn $1 million less over a lifetime.” [As of January 2025, 14 states in the United States have pay transparency laws as well as several counties and cities, including New York City.]

Employers’ Role in Promoting Saving

Developing a financial plan is also essential, the panelists agreed. “Absolutely no dart throwing,” said Hannon, adding that studies repeatedly indicate that people who have taken the time to develop a plan will have a successful retirement.  Lusardi advocates for a plan that goes beyond retirement and includes various life phases, such as caring for children or aging parents. By developing a plan as early as possible in their careers, women can achieve financial freedom. “It gives you the capacity to make choices,” she added.

Employers can help their workers achieve financial security through in-person or online financial literacy programs that target the specific needs of employees of different ages and passing through different life stages, said Moore. Corebridge Financial research has found that Gen X is the least confident, most worried and least likely to feel like they can retire well, Moore said. “And they definitely do not want to live to be 100 because they don’t think it’s going to be a positive experience,” she said, adding that Gen X is the first generation fully experiencing the loss of company pension plans and the need to fund retirement on their own.

While digital-on-demand programs are helpful, organizations that can be disruptors and try something different with their employee base are needed. “Let’s try longevity coaching. Let’s try some apps. We need to have those examples of who’s doing it right. Hold them up and look at them from a policy perspective,” she added.

Lusardi noted that billions of dollars are spent on giving people opportunities to spend. “We need to use those same tricks to persuade people to save,” she said.

Paula L. Green is a New York City-based freelance journalist with more than three decades of reporting and editing experience that spans coverage of international business and finance issues to murders and politics at the Jersey Shore to presidential press conferences in Argentina and Mexico. She can be contacted by plgreen12004@gmail.com. To read more of her articles, click here.

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