How COVID-19 Has Changed the Financial Course for Women

Adversity often shapes a person’s financial philosophies, and the COVID-19 pandemic is expected to become one of those defining events, like the Great Depression and the financial crisis of 2007-2009, that changes the way generations feel about money.

This is particularly true for women, many of whom are prioritizing financial security and resiliency as a result of the pandemic, according to a new study by Capital Group titled Women’s Financial Futures: New financial philosophies taking shape post-COVID-19. The report, which surveyed 2,000 American women and 500 men, found that women — especially women of color and millennials — have been unevenly impacted by the pandemic. Since the beginning of the pandemic, women have been more likely to lose their jobs and remain out of work months later, spotlighting the fact that the health crisis has also been a financial crisis for women, said the study.

Unworried about finances? Not women

Overall, the men included in the survey reported feeling confident, knowledgeable, satisfied and calm about their finances during the past year, according to Capital Group. About 25% of men surveyed said they are not concerned about their personal finances.

In contrast, the women surveyed reported feeling more concerned about their finances to the point of anxiety. About one-third of women surveyed said they are spending more time thinking about their finances as a result of the pandemic, with 47% considering saving more money if the pandemic disruptions continue into the summer and 43% placing a greater emphasis on saving for retirement specifically.

Diminished retirement funds

According to the survey, more than one-quarter (28%) of women reduced or halted their contributions to employer-sponsored retirement plans during the pandemic, and a similar percentage said they believe the pandemic will delay their retirement. Forty percent of women surveyed said they expect the events of the past year to have a long-term impact on their finances.

Less fear about talking about financial concerns

The report found a notable shift in attitudes among women about their willingness to talk about their financial concerns with friends and family. Typically discussions about finances are considered taboo, but more than half of the women surveyed said that when they communicate with other women about their personal finances, they find that others are going through a similar situation.

“This is one more sign of how women’s desire for financial resilience, and for forming a philosophy anchored in security, is motivating them not only to gather new knowledge but also to share it openly,” said the report.

Who women are reaching out to for financial advice depends largely on their demographic group, said the report. Baby Boomer women, for example, are more likely to have reached out to financial professionals, financial advisors at work and other traditional financial resources for information and advice. Millennial women are less likely to seek out professional advice, instead turning to their social networks as well as online and public sources of information.

Women of color are more likely to be socially connected, seeking advice first from social media, then from family, financial websites and friends, and finally financial professionals. Black women in particular were more likely to rank friends above family as their preferred source of financial information, said the report.

Millennial women were split on who they turned to for financial information, with older Millennials seeking out professional financial advice more often than younger Millennials.

Affluent women — those with between $500,000 and $2 million in assets relative to age — tend to be system connected rather than socially connected, have a wider variety of accounts and better access to financial professionals, employers and federal programs. Many affluent women who received COVID-related stimulus money invested it in brokerage accounts or individual retirement accounts, said the report.

Less likely to have gotten stimulus money

Meanwhile, the more socially connected women — women of color and millennials — were less likely to have received stimulus money and more likely to have applied for and received unemployment or supplemental nutrition assistance during the pandemic. Those who did receive stimulus checks were more likely to spend them on necessities, including food, utilities and rent. The survey noted that women of color reported feeling especially motivated to become more financially savvy and are taking action to increase their financial security by doing things like reducing daily spending.

Millennial women had the most nuanced and divergent experiences of all the women surveyed, said Capital Group. For instance, many millennial women reported feeling nervous or anxious about their finances, yet 45% said they feel confident about the future. And while millennial women were the most likely to have received financial assistance from friends and family, they were also the most likely to have given financial assistance to those networks over the past year.

Putting off retirement

In addition, millennial women were the most likely of all women surveyed to say they believe they’ll have to postpone their retirement, and nearly half stopped or reduced contributions to their employer-sponsored retirement plans or withdrew money from those accounts in 2020. About one-third of millennial women stopped or reduced contributions to their IRA. In both cases, about one-quarter said they have no plans to restore lost funds to their retirement savings.

Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM’s Retirement Advisor magazine and LifeHealthPro online channel. She also was a reporter for Business Insurance magazine covering workers compensation topics.