Despite widespread concerns, less than half of women investors have a strategy in place to protect their assets from a recession

As ongoing market volatility and uncertainty over the direction of inflation continues, women investors are more fearful of a recession today than they were in 2022, according to Nationwide’s eighth annual Advisor Authority survey, powered by the Nationwide Retirement Institute. Over 40% of women believe the U.S. is currently in a financial crisis, with another 24% believing that we are approaching one. Although a recession may seem likely, expectations regarding its severity vary: slightly more women than men expect a short, shallow recession that begins and eases up gradually, with men nearly 10% more likely to expect a prolonged, severe downturn followed by stagflation and instability (36% vs. 27%).

With concerns about market conditions top of mind, unease about retirement is up among women investors. Less than half (45%) of women say they have a strategy in place to protect their assets against market risk in 2023, down from 51% of women respondents who answered similarly in 2022.

Despite fewer women saying they have a strategy in place for retirement, an increasingly large percentage feel that there is no way to properly prepare for a recession, with nearly nine in ten (87%) women saying they can do all the right things to manage their finances but still be blindsided by outside events, a double-digit increase from 2022 (76%).

“It’s important to recognize and consider the unique retirement challenges facing women,” said Ann Bair, Senior Vice President of Financial Services Marketing for Nationwide. “We live longer and typically need to fund more years in retirement than men. Women also tend to have lower savings due to historical wage gaps and more time out of the workforce. The current economic environment has women feeling stressed about their future, but I’m encouraged to see many are taking proactive steps to seek guidance and create a plan.”

Making adjustments

Amid ongoing uncertainty, non-retired women are adjusting their approaches to saving for retirement to weather a potential financial storm. One third (31%) of non-retired women investors say they will avoid unnecessary expenses over the next 12 months to prioritize saving more for retirement, while a quarter (28%) say they will manage their investments more conservatively. If they retired in the next 12 months, more than eight in ten (82%) non-retired women said they would not take money out of their retirement savings prematurely to afford the growing cost of living, choosing to hold on to their assets for the long-term despite rising expenses.

In addition to changing savings habits, women are uprooting their lives to ease the financial pressures of planning for retirement. A sizeable portion of non-retired women (12%) plan to move to a new location with a lower cost of living this year – a relatively high number given only 8.4% of Americans moved in 2021[1].

Bracing for a recession, inflation, volatility and delayed retirement

Inflation continues to be a significant factor influencing how investors plan their retirement, but other factors are contributing to a lack of optimism as well. More than half (54%) of non-retired women investors believe that inflation poses the most immediate challenge to their retirement portfolio, followed by economic recession (38%) and market volatility (21%).

“It’s a reasonable bet that a recession is likely to begin at some point in 2023, but we’re predicting the impact to be less extreme than some of the more recent recessionary environments we’ve experienced,” said Mark Hackett, Nationwide’s Chief of Investment Research. “While it’s wise to prepare for the likelihood that inflation and market volatility will persist in the year ahead, the good news is that we don’t expect to see the level of impact experienced in 2008, for example.”

Ongoing pressures have non-retired women feeling increasingly underprepared. Twenty percent of non-retired women feel unsure about their ability to retire at all, a 7% increase from 2022. In addition, less than one in five (15%) non-retired women say they cannot afford to retire at all, up from 11% of women who felt the same in 2022.

When considering the prospect of retirement, women anticipate financial hardship – 84% of non-retired women investors say they would need to supplement their income based on their retirement savings, and nearly half (46%) of non-retired women investors say they would continue working in some capacity in retirement to supplement income out of necessity. More than one third (34%) of non-retired women investors say they would likely be forced to return to the workforce at some point due to inadequate savings.

Financial professionals helping women feel more confident

In light of continued economic pressures, women investors are increasingly turning to professional advice to improve the resilience of their portfolios. More than half of women (52%) work with an advisor or financial professional in 2023, compared to 45% in 2022. This is in contrast to men – 45% of men are working with an advisor in 2023, compared to 64% in 2022.

Financial professionals can provide a sense of security to investors, and guidance through turbulent times is a leading factor for women seeking professional advice. Nearly all women with an advisor (97%) say working with one helps them to feel more confident in their ability to make good decisions, even during a crisis – up from 88% in 2022.

Many women are feeling that the current environment makes now the right time to seek the help of a financial professional. This year, 16% of women say the reason they work with an advisor is because financial planning is a focus for them at this time — nearly double the 9% of women who responded similarly in 2022.

Advisors are also helping women stay focused on their long-term financial goals and retirement plans, preventing short-term decision making from detracting from the bigger picture. Nearly one in five (17%) women say working with an advisor helps them stay focused on long-term goals, up from 11% in 2022. Advisors are proving their worth with their clients as well, even as market conditions decline – 24% of women investors with an advisor say their financial professional protects assets against market risk, a nine-point jump from 2022.

“The best way for women to take control of their financial future is to work with an advisor or financial professional to develop a long-term plan and stick to it,” said Suzanne Ricklin, Vice President of Retention and Sales for Nationwide Retirement Solutions. “While the current environment may make it harder to visualize long-term success, history tells us that creating a solid plan and avoiding short-sighted investing decisions in times like these is usually the most effective course of action.”

Advisors lean into protection solutions

Financial professionals are educating investors and implementing various retirement solutions to insulate their clients from a potential recession. While just 7% of women investors are considering incorporating an annuity into their holistic retirement plan, financial advisors are more likely to use an annuity to protect a clients’ savings than any other form of retirement solution. Most (87%) advisors currently use annuities to protect a clients’ savings, with the next most commonly used solutions being Social Security (48%), fixed income ladder and bond ladders (44%), and dividend yielding stocks (43%).

Advisors say they will continue to incorporate annuities into their clients’ portfolios, with more than half (61%) planning to adopt strategies or annuities to help protect their near-retirement clients (ages 55-65) from outliving their savings.

“Annuities continue to be a great protection solution for many retirement portfolios and we see them gaining steam in the current pre-recessionary market,” Ricklin continued. “Annuities combined with proper investment diversification can help clients rest easier in turbulent moments like this and in the future when adverse conditions may return. Advisors will continue to recommend them to their clients in the coming months as the market heads toward a potential recession.”

For additional insights on this survey data, see this infographic.

Nationwide’s eighth annual Advisor Authority study powered by the Nationwide Retirement Institute® explores critical issues confronting advisors, financial professionals and individual investors—and the innovative techniques that they need to succeed in today’s complex market.

About Advisor Authority: Methodology
The research was conducted online within the U.S. by The Harris Poll on behalf of Nationwide from January 4-13, 2023, among 511 advisors and financial professionals and 789 investors ages 18+ with investable assets (IA) of $10K+. Advisors and financial professionals included 274 RIAs, 175 broker-dealers, 128 wirehouse and 55 other financial professionals. Among the investors, there were 203 Mass Affluent (IA of $100K–$499K), 167 Emerging High Net Worth (IA of $500K–$999K), 106 High Net Worth (IA of $1M–$4.99M) and 104 Ultra High Net Worth (IA of $5M+), and 209 investors with $10K to less than $100K investable assets (“Less affluent”). Investors included a subset of 224 “pre-retirees” age 55-65 who are not retired.

About The Harris Poll
The Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 that is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas: building twenty-first-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visit www.theharrispoll.com.

About Nationwide
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the United States. Nationwide is rated A+ by both A.M. Best and Standard & Poor’s. An industry leader in driving customer-focused innovation, Nationwide provides a full range of insurance and financial services products including auto, business, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com. Follow us on Facebook and Twitter.

Nationwide Investment Services Corporation (NISC), member FINRA, Columbus, OH. Nationwide Retirement Institute is a division of NISC.

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