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.