Women are more afraid of becoming "bag ladies" than men, and it makes them approach investing and saving for retirement differently, assuming they have managed to tackle either of those chores, say financial advisors who deal with large numbers of female clients and have many clients in or nearing retirement.

The bag lady image is an exaggeration in most cases, but "the fear factor is much greater for women, who think more about running out of money before they die than men do," says Theresa Hannon of the Theresa Hannon Financial Group in Wheaton, Ill.

The fear factor is not completely misplaced since, in general, women earn less than men so they receive smaller pensions and Social Security benefits, they are less well educated about investing, and they live longer than men and therefore need an income for a longer period of time, the advisors say.

A recent study by MassMutual's Retirement Services Division shows the "fear" gap growing between women and men, with 75% of women now concerned they will not have enough money for retirement compared to 62% of men. Last year, the gap was 70% for women and 63% for men.

Twice as many men have confidence the market will rebound than women, which affects attitudes toward investing and reinforces the women's tendency to be more conservative investors, the study says. But conservative investing can have both good and bad results, advisors warn.

The survey was based on responses from 1,517 participants in MassMutual retirement plans. Women made up 33.3% of the survey, with the largest group of respondents in the 50 to 59 age range (39.8%). The overwhelming majority were Caucasian (80.3%) and the largest group (40.3%) had household incomes between $50,000 and $99,000.

"We have been doing surveys since 2007 because we want our plan sponsors and their advisors to be better able to help their participants by knowing their audience. With accurate data, they can focus on the differences in their plans' populations," says Elaine Sarsynski, executive vice president for MassMutual's retirement services. "For instance, women have a natural conservatism and are not as focused on investments as men. Knowing the plan participants, the sponsor can target the program and benefits appropriately."

Somewhat surprisingly, many women still leave investment and retirement planning decisions to their husbands. "Whenever you have an older couple, almost invariably the husband is making the investment decisions," says Matt Zagula, founder and president of the Estate & Elder Planning Center in Weirton, W.Va., a fee-based financial and estate planning provider.

"Part of that is due to a time factor in that most women in a couple handle the checkbook and immediate finances of the household and men handle the investments," he adds. "This leads to many women being more concerned with income rather than just accumulation of assets and leads to them being more conservative in investments. Advisors need to understand that."

The situation in which men still control the investments is beginning to change, says Kimberly Foss, CFP and president of Empyrion Wealth Management in Roseville, Calif. "But I am shocked the gap is still so wide, even among some younger women," she admits. "I have 30-year-old women clients who still say they know nothing about finances.

"But the evolution for all women is happening, and I think advisors need to change their perspective," she adds. "Women are becoming more comfortable with finances, although it can take a lot of coaching. I call the women in their 50s and 60s 'tweeners' because they are in between learning investing and taking control."

Chris Abts, president of Cornerstone Retirement Group in Reno, Nev., has some clients who are typical for this group. One 65-year-old woman came to him recently. She had $370,000 in assets in 1997 and that had risen to $527,000 by October of 2007. But her assets went downhill in 2008 and she had to recoup 47% just to get back to breaking even.

"That is a typical situation, but she did not know how much money she could withdraw and not outlive her funds. We showed her how to eliminate some risk and still have more income than she was withdrawing at the time she came in," Abts explains. "We showed her strategies and provided her with the information she needed.

"To be able to do that, with the growing number of retirees, advisors need to decide if they are going to specialize in accumulation or preservation and disbursement," he adds.

Women and men have a different attitude toward investment, and women follow different influences that make it impossible to lump them all together in their investment attitudes or their level of preparedness.

"Men have a different kind of anxiety about assets," says Katherine Lintz, founder of Financial Management Partners in St. Louis and Denver. "Men are afraid of what will happen to their families if they die. Women are more afraid they will outlive their money. But women also are more willing to admit what they do not know, and they are anxious when they do not understand something. They want to understand and to have a voice in the decisions."

A woman's circumstances also affect her attitude toward money. "The widow is really afraid," notes Hannon. "The divorced woman, especially right after the divorce, is emotional and frail, so our practice does a lot of hand-holding. We do seminars, and often the women do not feel they belong there because they think they do not know enough, so we give them information and tools to deal with the situation. Our women clients who have always been single are in much better shape with less fear."

The differences in attitudes toward investing also can be used to the woman's advantage, advisors argue. Women can be too conservative and "not take the reasonable investment risks that they should," says David Loesser, a CFP licensee and founder of the Estate Planners Group in Washington Crossing, Pa. "Men usually take the lead, especially in older couples, so women have less experience, and they will stick to investments in CDs when they become the one in control. Women also receive, on average, half the pension benefits that men receive, making them more cautious. This makes education important for women."
But women are also more pragmatic once they have a good understanding of what they need and are willing to do what is necessary to manage their investments, notes David Giegerich, managing partner and co-owner of Paradigm Wealth Management LLC in Bridgewater, N.J. The firm specializes in clients in or near retirement.

"One of the things I would say to advisors is not to assume women do not understand investing," he says. "In fact, many women want to cut to the chase and understand their current income and future income. From an investment standpoint, they are often more concerned with absolute return, and not merely relative performance. Some men, on the other hand, can often be tempted by greater performance and will often try to chase better returns, often to the detriment of their portfolios.

"Advisors need to respect the priorities of their women clients," he adds. "Many women were not necessarily in control of their household's investments during the meltdown of '08, but now many have taken constructive steps to educate themselves in order to take an active role to get their portfolios in line."

Giegerich says that his younger female clients (those under 70) are often more involved in investment decisions than the older ones.

Those women who were making the financial decisions before 2008 were much less likely to abandon the market than men, says Foss. "When women understand what they are doing and feel comfortable, they make a decision and stick with it. When the market went bad, men wanted to bail out, women did not."

Barbara Shapiro, CFP and vice president of HMS Financial Group in Dedham, Mass., deals with many women who have financial decisions suddenly thrust upon them by divorce. She and Hannon both use the bag lady image to illustrate the heightened fears women have, and the fact that those fears are sometimes misplaced.

"I agree that education is the key because women usually earn less, which makes them more risk adverse than men," Shapiro says. "Not being financially educated can make women almost freeze into inactivity, but I try to tell them that leaving their money in the bank is the worst decision they can make."

Shapiro uses annuities to help her clients feel secure, but she also urges them into equities. "It takes many more sessions with women to explain the process than with a man," she says. "Not because men are smarter, but because men make decisions more quickly. Women will ask if they can take all the information home to study it and take their time. They want to understand every aspect."