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Retirement Planning > Saving for Retirement

Calming the Worst Fears of Women Retirees

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Nobody finds it easy to save for retirement, but when it comes to women, that task is proving especially difficult.

Indeed, a recent study by the Transamerican Center for Retirement Studies found that approximately 85 percent of women are not saving enough for their retirement. Of that number, 22 percent are barely saving anything. 

The problems:

  • Many women leave the workforce for various periods of time in order to raise children or care for parents. This reduces the amount they contribute into the Social Security system and the amount they can later collect from it, or their ability to find savings income.
  • Many women continue to earn lower wages than their male counterparts, which impacts the amount they can put into retirement savings plans.
  • Increasingly, many women are finding that their assets are being tapped by needy children – who should be out on their own but may be living at home again or have run into financial hardship and need a helping hand.
  • A large percentage of women remain ‘silent partners’ when it comes to financial planning with a spouse, and they fail to get the education they need in how to best save and plan for retirement
  • Now add another wrinkly to the picture: a growing number of women who find that as they near retirement they are being forced to find new jobs and often new careers.

No wonder, then, that the greatest fear cited by women approaching retirement age is that their money won’t go nearly far enough.

“What I see with most women, especially single women or single childless women, is a real fear of outliving their money,” said Kristi Sullivan, owner of Sullivan Financial Planning in Denver.

It’s an understandable feeling, Sullivan said. “We all know that women tend to live longer. Men all think they’re going to die before they’re 60 and they don’t have to worry about longevity. Women are must more interested in the stability of their assets. They’re much less interested in taking risks for growth. Women want to know that the money is there and will be there for a longer period of time.”

The Common Denominator: Life-Changing Events

Sullivan doesn’t focus exclusively on female clients, but she has she has a lot of them. And if they are seeking retirement planning advice without a partner, there is one common cause—a life-changing event.

“The majority of my clients come to me because of a lifestyle event,” Sullivan said. “Most people don’t come and pay for advice unless then have some sort of pain point of some kind of thing that they are trying to get over, to get around, or to get a handle on. It might be a divorce, it might be because of becoming widowed, it might be getting married, and of course retirement itself is a big one. Also, I get a lot of people that come to be because they are going to receive an inheritance and it is their first experience with a large sum of money.”

Whatever the lifestyle event, the result is a lot of questions on the part of the client.

For example, “Am I saving enough for retirement? Can I retire when I’m 59 or do I have to wait until I’m 64? Can I help my daughter pay for graduate school? Can I afford a second house?,” Sullivan said. “They have all these questions around lifestyle and decisions that they want to make. I will run the numbers for them and let them decide how reasonable there expectations are based on what they’ve saved.”

For a growing number of female clients, the message is simple: keep working.

“Women tend to have more breaks in their work history which will drive down their Social Security benefits,” Sullivan said. “So to explain to women that, if you can get that 30 years of paying into the Social Security system as opposed to 20 or 25 years, look how much better that makes your benefit. So, working a little longer really has a big impact, and more so for women than men.”

It’s a similar message at Inspired Financial in Huntington Beach, Calif., where Evelyn Zohlen specializes in female clients.

“We focus almost exclusively on women in transition and their families,” Zohlen said of her firm. “The vast majority of our clients came to us when they are getting divorced or have lost a parent or a small business, so we do have particular expertise in helping women navigate through these transitions.”

“Most specifically, we deal with women facing a major live change that is going to have lasting impact on their financial future,” Zohlen said. “It’s not that the dollars are any different for women than they are for men. But how women communicate is completely different. How women want to be educated and empowered is very different.”

Zohlen cites all of the same circumstances noted by Sullivan that bring women into a retirement planner’s office. But she says there is an alarming new trend that is becoming too common – the older worker losing a job.

“A lot of what I see these last few years is what I call late life involuntary career changes,” Zohlen said.

“The scenario is that she’s 57-years-old and has been in senior management with a company. They’re doing some restructuring, some reorganizing, some downsizing, and she is thanked profusely for her decades of service and offered a nice fat severance package, but told her last day is going to be June 30,” Zohlen said. “She comes to me and says, ‘I think I’m going to be ok, but I’m not sure. So I need some help. Do I have the right kind of insurance? Do I have enough of it? Are my estate documents right for the legacy I want to leave?”

But most importantly, “they know in many cases they aren’t going to be able to get a job similar to the one they had. So they want to know, ‘can I do something else? Is it ok that I always wanted to be a chef? Is it ok if I go to the local community college and get a baker’s certificate and work in a bakery, because that is what my heart desires? Will I be ok if I do this instead? Can I volunteer? Am I going to be ok if I’m not making as much as I use to? Getting permission to pursue a passion that may have been on hold for decades is liberating for a lot of these ladies.”

This downsizing of a career obviously couldn’t come at a worse time for the soon-to-retire woman. And it makes the job of the retirement planners especially critical. This is where discussions about retirement age also get very important.

“A good financial planner is going to help her by saying, ‘let’s run some different scenarios and you tell me what choices you’d like to make,” Zohlen said. “Maybe you aren’t going to be able to retire at age 66. Maybe you’re going to need to work until you’re 70. How do you feel about that? Maybe 66 is ok, but you need to bring in $15,000 a year in supplemental income. So we’ll try to give them options so that they feel empowered that they have a choice in this.”

“It’s a combination of the iron-fisted velvet glove,” Sullivan said. “You need to be honest, especially with women transitioning from married to divorced, or married to widowed, if they are going to need to make lifestyle changes. You need to tell them that. But you’ve got to do that in a way that is nice. They’re going through a lot of emotional change.“

Which brings us back to the topic of the ‘silent partner’. Both Sullivan and Zohlen agree that too many women are unengaged in financial planning matters even while still married.

A recent study by financial research firm Hearts & Wallets referred to such women as the “uninvolved spouse,” and said that 80 percent of these uninvolved spouses are women.

“What I find to be very strongly the case is that in a couple one person runs the finances and the other person tunes out. I rarely get a couple where both people are deeply engaged in the process,” Sullivan explains. “In the majority of cases the person that doesn’t want to pay attention is the woman.”

“I tend to pay more attention to that person,” Sullivan said. “I look at them more. I try to engage more eye contact with them. I try to direct the conversation more to the less-engaged person. Also, I try to not use jargon that am using real people language and not financial planner language. I think that is something we all need to do more of, especially with an unengaged person.”


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