Feelings of insecurity often pop up when the subject of women’s retirement comes up. So why are women’s retirement planning and saving such hard things to do?
The path to retirement preparedness is cluttered with many obstacles. These often arise from a need to provide care for children, spouses, or elderly relatives.
Women more often also take career breaks and/or move toward part-time or contract work. Many employer-sponsored plans do not extend retirement benefits to non-full-time employees which consequently cuts out matching contributions and the higher savings rates they offered.
Envision Wealth Planning offers some easy action steps to increase women’s retirement preparedness.
When it comes to retirement preparedness, women put spouses first
Women live longer and often marry spouses that are younger. If they happen to stay married this multiplies the longevity issue. Remaining single, partnered, or divorced creates another set of unique challenges. For example, if your partner dies how will their economic contribution be replaced?
Often, women may believe that their spouse or partner is taking care of it. Expectations of pensions and savings and investment returns can create overly optimistic thoughts. It is natural to focus on today’s needs, believing that long-term goals can be put off until later. Then suddenly later becomes today!
Women’s lack of retirement preparedness contrasts sharply with otherwise confident and engaged behavior in deciding household budgets. The vast majority of women (80%) are actively involved in managing their households’ budgets and finances. Women attach a high priority to managing household finances, and this is an area where 71% feel financially confident. The need for working mothers to concentrate on short-term finances is clear.
Not surprisingly, some women feel dependent on their spouse’s income in later life. Over half (54%) of women who are married or living with a partner say that their spouse/partner will be “very” or “extremely” important as a source of financial support during retirement.
Furthermore, only 12% of women say that they do not expect their spouse to be an important source of retirement income. While a spouse or partner can provide a certain amount of support, a divorce or the loss of a partner can quickly and dramatically change a woman’s financial situation.
Turning women’s retirement anxiety into planning and action
Women generally feel responsible for their own retirement income, are aware of the need to plan financially for their retirement, and understand women’s retirement planning matters. However, this does not often enough lead to action in the form of planning and saving. Only 10% of women say they feel “very prepared” for retirement and are confident they are already saving enough. Over twice as many women (23%) say the opposite: that they feel “much unprepared” and are hardly saving at all.
One simple step to improving women’s retirement preparedness. The most important factor in explaining the retirement preparedness of women is their attitude toward savings. Only 36% of women claim to be dedicated savers. Their approach is always to make sure they are saving for retirement (which is not necessarily the same as “saving enough”). The priority must be to create a retirement planning model which fits around women’s lives. This must recognize the dual role performed by women, who increasingly find themselves as both breadwinners and caregivers.
Clare from The United Kingdom put it this way: “It might help if I had some professional financial advice to help me plan more effectively.”
One size planning does not fit all women
We agree. One size fits all advice does not fit all women who may be single, married, divorced, or partnered. Such a customized plan should preferably also provide a backup plan to cover unforeseen events. If you aren’t single Irma, an interviewee from Hungary said, “It is good to know that my spouse will contribute to our retirement financially, because it is much easier together. It is important for your partner to have standalone savings because anything can happen.”
Why go it alone? Use the help of a Certified Financial Planner (CFP®) to help with both a savings plan and an action plan. If your workplace offers one use it. If not, you can go to the Find a Planner Search tool on the Letsmakeaplan.org website to find one in your area or Contact Us.
Does your workplace offer advice from a CFP or advisor that is legally working in your best interest? A CFP® will be able to help you determine how much you need to save, given your risk tolerance and expected retirement date. More importantly, they can be a sounding board to learn about the particular goals and obstacles that are uniquely yours. This may include a customized plan to decrease debt, lower spending or use pay raises to fund retirement. That may include such things as disability, long-term care insurance, and insurance to replace the economic contribution of your spouse or partner. No time for the paperwork? You can ask your financial planner to help you with the paperwork at work or separately set up an IRA if needed.
Increased financial literacy calms the nerves of financial uncertainty!
Click here to initiate a conversation with Envision’s Women’s Financial Planning Consultant, Kathleen Connors to discuss financial planning for women. Learn how you can start planning for a long(er) and comfortable retirement!
As a financial consultant, specializing in the financial needs of women, Kathleen Connors understands that you want to work with an adviser who is relatable and trustworthy. She focuses on life’s unique goals and takes the time to educate her clients about their financial future. Kathleen is passionate about helping women reach clarity and confidence around their finances. It doesn’t matter where a client may be in their life’s journey. Kathleen brings warmth and compassion to the financial planning process, with no judgments.