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Avoiding Women’s Retirement Insecurity While Balancing Family & Career

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Feelings of insecurity often pop-up women when the subject of women’s retirement prospects come up. You are not alone.  The 2014 Aegon Retirement Readiness Survey, found this insecurity to be a global problem. Only 20% of women think they are on track to achieve their required retirement income and 40% state that they don’t know. We offer some easy action steps to increase women’s retirement preparedness.

Why is women’s retirement planning and saving hard?

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 take career breaks and/or move toward part- time or contract working. 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.

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 on focusing 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, women feel dependent on their spouse’s income in later life. Over half (54%) of women who are married or living with a partners say that their spouse/partner will be “very” or “extremely” important as a source of financial support during retirement. Further, only 12% of women say that they do not expect their spouse to be an important source of retirement income. It should be noted that while a spouse/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 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. Overall, just over one-third of women (36%) claim to be dedicated savers whose 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 an interviewee from The United Kingdom said:

“It might help if I had some professional financial advice to help me plan more effectively.”

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 for a back-up plan to cover for 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 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 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 (See SAT). 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 using 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 them to help you with the paperwork at work or separately set-up an IRA if needed.

Increased financial literacy is always a solid investment in calming the nerves of financial uncertainty. Clients of Envision Wealth Planning receive a personal website that includes extensive videos and resources on retirement planning, college planning, estate planning, etc. It’s also available on your smartphone. We recognize your life is hectic and want you to be able to access the information when it fits your schedule. This Life In a Box video will give you some quick insight into your personal financial planning organizer. Let us know if you would like a test drive.

I hope that this will help you find your path to retirement confidence.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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