Generally speaking, it’s no secret that people aren’t saving enough for retirement. But when the conversation focuses on women and retirement, that struggle may be even more pronounced than what men face.
We continue to see data that shows women are outliving men yet, in many cases, still aren’t on equal ground with men in terms of salary.
Now, new research from Aon Hewitt suggests that 83% of women in the U.S. won’t be able to meet their needs in retirement compared to 74% of men.
To put this in perspective, the research projects that women will need 11.5 times their final pay to meet their needs in retirement. If that doesn’t hammer it home enough, let’s talk about just the path of getting to retirement for women, in which there is a gap of 3.3 times the pay between what they need and what they’ve actually saved at this point if they want to retire by age 65.
As you can imagine, many women are finding that, due to these factors, retiring by age 65 is a pipe dream. They find themselves working longer – on average, to 69 years old – which includes working longer than men to comfortably retire on their own terms.
Men Still Doing More Long-Term Planning
The times are changing in terms of which parent stays home with the kids more and who does the financial planning of the household, but there’s still a lot of work to do to empower women to be as involved with retirement planning compared to men. We tend to see women more highly connected to handling financial planning for the day, week and month to keep the household running smoothly. But when it comes to women and retirement, some not as many have intimate knowledge of the long-term financial outlook they need.
Think about how this scenario plays out – a woman is more likely to outlive her husband but hasn’t been a part of the retirement planning. He knows what vehicles they’ve invested in, he knows what every aspect of their plan entails and he knows just how much needs to be saved in retirement. She’s OK with that because long-term money management is “his thing” and well, retirement is still a decade or more away.
Well, life has its way of throwing us a curveball now and then.
He suddenly passes away unexpectedly. What now? All alone, she doesn’t know nearly as much as she should about their retirement plan. She’s been thrust into a role that she didn’t have before and frankly, should have shared with him so she could at least approach the financial future with more confidence. If the transition without her husband in her life wasn’t hard enough, she now has a wave of new questions, fears and doubts about what tomorrow holds. We’ve also seen a similar scenario occur in women who find themselves single later in life due to a divorce.
How Does She Keep On Track…Or Get Back On It?
A few thoughts:
1) First and foremost, you should never go it alone on retirement planning. And for the resource helping you, there should be no such thing as a stupid question.
Retirement planning is always a shared conversation between you and a financial resource who can take the time to educate you thoroughly, like Fiduciary Financial Partners. There are a lot of concepts that can be complex to understand, especially in how they pertain to your unique situation. A broker can pick stocks but they rarely want to take the time to explain all the ins-and-outs of the financial landscape to you. That’s probably not the best kind of partner for your financial literacy.
2) The days of “she balances the checkbook, he handles the 401(k)” need to end.
We recommend that both husband and wife be a part of the long-term retirement planning conversation so that you have as close to an equal understanding as possible of your assets, debts and goals. Obviously, one of you is going to outlive the other – and that person can’t be the one completely in the dark, feeling helpless because the deceased was the person who knew the total financial picture.
3) “I’ll just work longer” is not a retirement planning strategy.
Employers can help you as a retirement plan participant, but you have to assume that they’re also looking to contain costs when employees want to work past a certain age. So simply working longer, even if you’re retiring closer to 70 years old rather than 65 years old, probably isn’t going to be the simple answer you’re looking for.
A smarter approach is to talk with us at Fiduciary Financial Partners about the many aspects of your retirement plan so that you can feel better about your path ahead. It’s a conversation that also includes us making sure that you’re properly allocated on your accounts so that you know what you have, what you can (and can’t) withdraw from and if the present set up of your portfolio reflects your goals for retirement.
Women and retirement goals have to be in complete sync – retirement is a destination that everyone should reach and it shouldn’t be more difficult for one group versus another. That includes enjoying a comfortable living in retirement too. To accomplish that, whether you’re on your own or have watched your spouse handle the long-term planning, what you deserve right now is completely objective guidance from someone who isn’t trying to sell you on a certain financial vehicle to meet a quota. That’s what makes Fiduciary Financial Partners different. We don’t make commissions on financial vehicles, so we can be totally independent and focused on your goals. And that helps us work in your very best interests and educate you on the options that lie ahead.
Ready to see how that works? Bring FFP your financial statements and we’ll provide you with a no-cost review of your investment goals and strategies so that you can Confidently Embrace Your Financial Future. Call us at 630.780.1534 or email firstname.lastname@example.org today.
Nick Economos, CRPS is a dedicated independent Financial Advisor and Chief Retirement Officer at Fiduciary Financial Partners. He has a wealth of expertise in designing qualified retirement plans and participant education programs.