MP Dunleavey

Women in Red

Why women will run the economy

Increasingly, women are earning more graduate degrees than men (which should help close that persistent pay gap). So, let's take that can-do spirit to retirement planning.

By MP Dunleavey
MSN Money

For years now, those of us who watched and worried about women's economic state tended to sound like town criers during the Plague:

Woe is woman! She doesn't understand money! She isn't saving! She's not earning enough! She'll retire broooooke!

As someone who has been the bearer of tidings like these, I thought I was doing women a favor. You know: Wake up and smell your bank statement.

Now I think all that fretting had masked a trend toward what may be a new world order. Call it the rise of the "she-conomy."

Moving on up

"She-conomy" sounds like some kind of bad cable-TV reality series. But in fact, a series of significant changes are adding up to a new financial reality for American women, who wield more economic power than ever before:

  • Women hold 60% of advanced degrees among adults 25 to 29, the Census Bureau reported last month, and half among adults of all ages.

  • As more women attain advanced degrees, their earnings power is likely to rise, the Census Bureau predicts. According to 2008 data, the most recent available, people with bachelor's degrees earned an average of $58,613 a year and those with advanced degrees an average of $83,144.

  • Women are now the primary home purchasers in nearly 25% of all deals, up from 14% in 1995, according to the National Association of Realtors.

  • Women control about $4.3 trillion of $5.9 trillion in U.S. consumer spending, calculated the authors of "The Female Economy," a study published in the Harvard Business Review in 2009.

  • Women occupy half (49.8%) of the U.S. work force and, according to the Internal Revenue Service, constitute 43% of the nation's top wealth holders -- those with assets of at least $1.5 million.

Embrace it, baby

No longer are women "fearful financial wallflowers," says Linda Descano, the president of Women & Co., a financial advisory division of Citigroup.

"When you combine all the different ways that women are influencing the economy, it adds up to what we're calling the she-conomy," she says.

And women are embracing the new economic order, Descano says, citing the results of "Women and Affluence 2010," a study by Women & Co., which surveyed more than a thousand women ages 40 to 70 with investable assets of $100,000 or more.

Not only do 82% of women rate themselves as knowledgeable about investing and finances, compared with 75% in 2008, two-thirds consider themselves "the chief financial officer -- responsible for their families' financial planning, investing and retirement," the report states.

How's your retirement?

But even for these more affluent women, as for most of us, security and retirement remain paramount concerns. When women were asked how they defined wealth, the top responses were security, health and the ability to retire comfortably.

In my experience, most women are concerned (and some deeply worried) about their long-term security. I've been studying the numbers -- and running my own -- and I've decided that if there's one thing the she-conomy can do for women across the board, it's to inspire us to make a happy, healthy retirement a priority.

Recent surveys suggest that women still don't feel confident about their ability to manage their retirement plans, according to the Women's Institute for a Secure Retirement. A 2009 study by McKinsey indicated that 32% felt unprepared for retirement. The Retirement Confidence Survey released in March by the Employee Benefits Research Institute, or EBRI, reported similar results.

Descano points out that sometimes women's self-reports can be misconstrued. "It's in our nature to say that we can do more," she says. "I think many women's responses should be viewed as a desire to learn more, not necessarily a lack of confidence."

She may be right, but the overall retirement numbers are still grim. According to EBRI's latest survey, 54% of both male and female workers said that the total value of their household savings and investments (not including home equity or a pension) was less than $25,000.

Continued: 3 ways to focus

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