Women are less ready for a long re­tire­ment

The Washington Post Sunday - - BUSINESS - Rod­ney Brooks

Ed­u­cat­ing women about per­sonal fi­nance is­sues is per­sonal for fi­nan­cial ad­viser Wendy Ann Payne.

The is­sue hit home for Payne, found­ing part­ner at Cen­tu­rion Wealth Man­age­ment in McLean, when her un­cle died un­ex­pect­edly. Her aunt and un­cle were sure they had done ev­ery­thing right. As it turned out, that wasn’t the case.

“They had a will, life in­sur­ance and money in the bank,” Payne says. She took some com­fort know­ing they had done what is proper. But later, she re­al­ized it was not nearly enough. Her un­cle had per­son­ally guar­an­teed busi­ness debt, and the life in­sur­ance was not enough. There were a lot of chal­lenges.

“If my un­cle were here, this is not the life he had in­tended for my aunt,” she says. “This is what plan­ning was sup­posed to avoid. But it was not lack of plan­ning — it was lack of aware­ness.”

Women face a unique set of prob­lems and is­sues when it comes to re­tire­ment. As a re­sult, some plan­ners now fo­cus their busi­ness on women. Some, like Payne, have also made im­prov­ing fi­nan­cial lit­er­acy among women a pas­sion.

“A lot of women don’t take the ini­tia­tive to learn more,” Payne says. “Their hus­bands take care of ev­ery­thing. It works for that mar­riage, but what if it goes

sour? Fifty per­cent of mar­riages end in di­vorce.”

Ac­cord­ing to a new sur­vey by GfK, a con­sumer mar­ket­ing re­search firm, women in the United States are much more un­cer­tain or pes­simistic about their re­tire­ment fi­nances, with 60 per­cent say­ing they are un­sure or not con­fi­dent, com­pared with 41 per­cent of U.S. men.

“Women do face a num­ber of chal­lenges ahead of re­tire­ment due to a lot of fac­tors: longer life ex­pectan­cies, lower av­er­age wages, less fi­nan­cial con­fi­dence. And they bear a large share of care­giv­ing for both ag­ing par­ents and chil­dren,” says Cathy McCabe, se­nior man­ag­ing di­rec­tor of TIAA-CREF’s Field Con­sult­ing Group. The chal­lenges fac­ing women:

Longevity. “They are very aware that they live longer than men,” says Kath­leen Hast­ings, port­fo­lio man­ager at FBB Part­ners in Bethesda. “Longevity in the U.S. is at an all-time high. They know they have to plan, be­cause they know they might run out of money.”

“Of the peo­ple 65 and older, 76 per­cent of men are mar­ried and 46 per­cent of the women are mar­ried,” Payne says. “So many more fe­males over 65 are liv­ing in­de­pen­dently. They have a longer life span to stretch those dol­lars.”

Of­ten be­cause of parental or care­giver re­spon­si­bil­i­ties, women are more likely to work in part-time jobs that don’t qual­ify for a re­tire­ment plan. The 14th An­nual Transamer­ica Re­tire­ment Sur­vey found that 45 per­cent of women work part time, com­pared with 24 per­cent of men. The re­sult? A lower wage base and less ac­cess to key em­ployee ben­e­fits, such as health care and re­tire­ment plans. It also means that they have less money go­ing into So­cial Se­cu­rity and, as a re­sult, lower ben­e­fits.

“They are be­hind go­ing out of the gate,” Payne says.

Work­ing women are more likely than men to in­ter­rupt their ca­reers to take care of fam­ily mem­bers. “Women spend, on av­er­age, about 11 years out of the work­force to care for chil­dren or el­derly par­ents,” McCabe says. Dur­ing that time, they are not re­ceiv­ing in­come, not re­ceiv­ing em­ployer ben­e­fits and not sav­ing. They are miss­ing out on all the ben­e­fits.”

Women tend to be con­ser­va­tive in­vestors. Payne says there is a ten­dency to in­vest in money mar­ket ac­counts and bank CDs, even as in­ter­est rates are es­pe­cially low these days. “That’s not al­ways a good thing when you have your sav­ings in cash or cash equiv­a­lents,” she says. “You are also los­ing the power of com­pound growth over the years.”

Deb­o­rah Owens, a fi­nan­cial ex­pert, says that “what you think is that even­tu­ally you will be mar­ried, there will be a re­tire­ment plan and pen­sion.”

“The fact is, 9 of 10 women will be solely re­spon­si­ble for their fi­nances. They will ei­ther never marry, marry and di­vorce or sep­a­rate, or will be wid­owed. It’s crit­i­cal that women know they have to take con­trol of their fi­nan­cial fu­ture. The onus is on them to save for re­tire­ment,” says Owens, au­thor of “A Purse of Your Own: An Easy Guide to Fi­nan­cial Se­cu­rity.”

Women need to con­trib­ute to an IRA if they don’t have a re­tire­ment plan at work, she says. “One of the bar­ri­ers is they think they can’t af­ford it,” Owens says. “I say, do some­thing, even if it’s $100 a month. The goal is to cre­ate a habit. As earn­ings in­crease, you can in­crease those con­tri­bu­tions as well.”

And there’s yet another prob­lem: Women may find fi­nances in­tim­i­dat­ing, Hast­ings says.

“You wouldn’t think so, be­cause a lot of women run the fam­ily bud­get. But when it comes to in­vest­ments and fam­ily plan­ning, they take a back seat to their hus­band [or] sig­nif­i­cant other,” she says. “I see it when we have meet­ings. I try to en­cour­age women. But of­ten it’s the man who comes. Even buy­ing in­sur­ance — women aren’t in­volved in that as much as they should. I don’t un­der­stand that.”

Women are more con­fi­dent about re­tire­ment when they get ad­vice, McCabe says. And she says women should read more about fi­nances and in­vest­ments. “Women are good at vi­su­al­iz­ing things,” she says. “We know what we want in re­tire­ment, but con­nect­ing the dots in be­tween is more dif­fi­cult for women — how to get from where you are to that re­tire­ment vi­sion.”

Don’t wait, McCabe says: “Get the help. The longer we wait, the less time we have to save dol­lars for re­tire­ment.”

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