Today, we’re talking about strategies for women in retirement and some of the unique challenges that women face when it comes to retirement planning.
Heather Atkins is a Certified Financial Planner™ and does a number of different seminars specifically to women on retirement planning. We do quite a bit of events for women specifically because there are needs that women have that are different than men. How it all began was seeing that there aren’t many women in the space sharing their experience, their voice, and creating an environment that is safe to get questions answered.
A lot of the top concerns of women are actually similar to those of men, which would be making sure there’s enough money to last as long as we do. We also live longer on average, so that is really scary to think about, that we are going to have enough to last 30-40 years from now.
Absolutely. Women, more so than men, feel that extra burden of putting everybody first and it’s hard to pour from an empty glass. So, if we don’t put ourselves first, we’re not going to be able to take care of our kids, grandkids, and other family members.
Joel Johnson, CFP® shares that his wife Wendy makes a lot of the day-to-day household decisions while he tends to make the larger investment decisions. How can that be done better?
Heather says the Money Map, our one-page retirement plan, is a really good start for getting involved in helping with the decision-making because we’ve made it so simple for our clients to have all of that information in one place. So, women should absolutely be involved, and maybe it’s not making all the calls all the time, but at least knowing or having a general understanding of what it is that we have, how it works, and what it will mean for us.
Many times, there are two chapters of life: the married chapter, and then unfortunately the chapter when one spouse is no longer with us. In that case, there’s sort of this reset and it’s almost like a fish that’s been pulled out water, because a lot of our women clients feel like they have to start completely from scratch.
It certainly is very different and a shock to the system anytime someone is no longer here. For our clients who are widowed, it’s important that when they were together, both alive and well, that we built out a plan that considered worst-case scenario; When it is just one spouse remaining, what will that income plan look like? It’s about making sure there’s going to be enough money coming in. If there’s a reduction in income, maybe Social Security is going down because it’s one person instead of two, or a pension income and what survivorship was set up at the beginning. So, it can sometimes feel like we’re starting over, but hopefully the bones and the foundation of a good plan have been built so that there is some confidence going into that next phase.
Taxes can go up when you’re no longer filing jointly and taking advantage of that higher tax bracket. Your tax bracket can change for the worse and so it’s really important to be talking to your advisor, your accountant, and tax professional to see what strategies exist now in this next phase.
When we’re sitting down with somebody in their mid-50s and they are getting a bit more serious about retirement planning, one thing I’ve noticed is going back to look at that savings rate and contribution rate, because it might have been almost impossible to save a lot when the kids were younger. Going back to women putting others first, maybe it was set up to just do a simple 5 or 6% contribution rate.
So, now would be the time to really increase that and amplify your savings rate, because hopefully for most people, their kids are out of the house or they’re able to finally put themselves first. So, make sure that enough money is going into those savings plans and revisit that, as well as building out a financial plan to retire: What does it take from now if the goal is to retire at 65, 10 years from now? What does it take to stack the deck in their favor and make that a reality? Talking to somebody likely a fiduciary Certified Financial Planner™ is going to help set that up.
If someone has 15 years left remaining on the mortgage, going back to the taxes; does it make sense, is it advantageous, for them to save a little bit on their taxes to hold on to that mortgage, or are they better off paying that down sooner before age 70? Women fear having that debt hanging over their head and losing sleep at night. It’s not always a black and white answer; it’s that gray area, and so peace of mind is going to be key.
If it is their number one goal or biggest concern to be debt-free going into retirement, let’s make sure we’re building out a plan with that in mind.
How do you combat that, and are people as aware of that as we are as financial planners?
It is becoming more common knowledge that women know they’re going to be here longer. As a result, we need to have more saved up. Long-term care is a concern for a lot of women that we speak with because if it’s just them left at the end, who’s going to take care of them and who’s going to take care of us? So, make sure that these conversations are had when both parties are alive and make sure that no box goes unchecked.
As we meet with clients, many times, one of the adult children will come in with their Mom, probably later in life. I think about my mom who passed recently but once she hit about 75 or 78, she did not want to make decisions alone. She always wanted help. Do you recommend that? There are challenges that come with that, when the adult children come in with Mom, because if Mom’s 75 and those adult children are 45 and 50, sometimes that is a good thing, sometimes it’s not necessarily.
I certainly encourage getting a second opinion when it comes to anything medical related and when it comes to getting a fresh set of eyes on the plan. I encourage clients to bring their kids in, so that they are familiar with what next steps to take if and when this money is to pass on to them.
There are some challenges that may come up, for instance, if it’s their first time hearing about the plan, they might have some hesitations. Like, “Well, why is this account appropriate for my mom?” If somebody is 45-50, they might not get it as somebody that’s so far away from using their assets. Whereas somebody that’s in their 70s or 80s, they’re actively living off of their accounts so their goals are different than their kids. It’s important that we have that open dialogue, so I certainly encourage their kids to be part of that meeting, but being open-minded too.
It’s important to be open-minded because the kids can forget it’s Mom’s money, they act like it’s their money, and we have to very gently and diplomatically put them back in their place.
The division of labor is oftentimes tilted more towards women to take care of our elderly parents as they’re aging. So, it’s really important to be all hands on deck, where you’ve got every family member chiming in and helping, so it isn’t so much of a burden on the women in the family.
If there’s a long-term care situation or somebody is living at home and having hospice or skilled nursing come in, that is certainly a challenge and a stressor that is not talked about enough. Like we talk about in our meetings, it’s an opportunity for us as advisors to get that out there in open air, so that we can see where they’re coming from, and how we might be able to help in other ways; maybe it’s not financial advice per se, but maybe it’s just giving support in a different way.
When you’ve helped hundreds of people retire, you’ve seen them walk through this from age 65 to 75, and some of the challenges that they can face. And of course, it’s the same thing with somebody 75 going to 80. The neat thing about our clients is they’re only going to live that once, but we as financial advisors have seen hundreds of people go through that. We have that collective wisdom we can share with them about how we’ve seen things handled well, and some things not handled very well.
This is one of the most important things. Especially if a woman is recently widowed or divorced, we see a tendency to change financial advisors if the husband was the one that picked the financial advisor.
There can certainly be a moment where we’re tempted to freeze up, when as a widow, if the spouse that was handling the money is no longer there and it’s a time to really be working with somebody. You don’t want to go at that alone navigating the finances, especially if you were left in the dark on some of the details. Picking an advisor at the most basic level, going with your gut on who you connect with, who you trust; and that’s a feeling, more than it is a black and white answer.
Start by going to events like educational programs and women’s workshops and connect with the speaker. Finding an advisor that can speak on your own experience and who is a fiduciary is key. You want somebody that’s going to be working for you in your best interest. Working with an advisor that’s a Certified Financial Planner™ is certainly a plus, too. They will be looking at things from all angles and building out that comprehensive plan, so it’s really important to work with somebody that speaks to you in terms that you understand and isn’t talking over you.
We make things very simple and easy to understand, and that’s the kind of person I want to be working with. It’s a similar way with doctors. When the kids were younger, or even now, and you look for somebody that will listen to you and that you can relate to, not just the most brilliant person out there.
It’s not just women, it is important for everybody to find a financial advisor they feel like understands them, because financial advising is not just all this analytical stuff; it’s about guiding somebody emotionally. And the emotions, we have found, are the biggest thing that can ruin somebody’s retirement plan and ruin somebody’s investments. Emotions can make you do the wrong thing at the wrong time.
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