As a woman in the financial services industry I’ve gotten used to the fact that at industry events I will be the minority. Female financial advisors make up about 8% of the advisory workforce, according to Cerulli Associates data.
Yet as measured in the 2010 U.S. Census, women outnumber men in every near-retirement age category (from 45 – 69). We are more than 50%. And we live longer. Which makes me wonder, should women look at retirement planning and selecting their retirement age differently than men?
After all, gender-based medicine has begun to study how women and men respond differently to the same disease, or metabolize the same drug in a different way, and studies on investor behavior show women approach investing decisions differently than men. Perhaps retirement planning should be viewed differently too.
Women, when you are planning your retirement the fact is many of the decisions you make will have a bigger impact on you than on your male counterparts. Here are four things you can do to incorporate planning decisions that are right for you.
1. Career-based decisions
The traditional concept of retirement needs to evolve. Today, a female retiring at 62 might need retirement income that will last 30-plus years. That’s a long time. You can save and save for 30-40 years of your life to support a 30-40 year long retirement, or you can try a different approach.
What about focusing your career in a direction that will allow you to continue to contribute well into your 70’s? Find work you thrive on and you’ll find a whole new sense of fulfillment. Your 40’s, 50’s and 60’s can be time to dive into your intellectual side. Your retirement plan should include decisions that develop your skills, expertise and earning potential.
2. Investing decisions
When you are accumulating assets and tossing money into retirement plans, it is natural to go for high returns. As a general rule of thumb, men tend to approach investing from this view point.
As you begin to make a shift to what is called “decumulation,” the point in time where your money needs to produce reliable income to replace your paycheck, you need a different approach. Women approach investing decisions differently than men and their approach is well suited to evaluate the risk-return trade-offs that are oh-so-important to managing retirement money.
Women, as you near retirement, take a more active role with your investing decisions. It helps to frame decisions in terms of their impact on your future lifestyle. At a certain point additional returns are unlikely to have a meaningful impact on your retirement security – but big losses can certainly derail your plans.
3. Social Security claiming options
Women are often eligible for spousal benefits on a current or ex-spouse’s Social Security earnings record (if you have a prior marriage that lasted 10-plus years make sure you look into your claiming options on your ex’s record.) They are also likely to be the beneficiary of Social Security survivor benefits one day.
If you are a married woman the key is going to be making a choice that maximizes your benefits as a couple when viewed over your longer life expectancy. If you’re divorced and eligible for benefits on an ex’s record, you may be able to claim a spousal benefit for a few years, than switch to your own higher benefit amount when you turn 70.
For single women not eligible for benefits on anyone else’s record, starting benefits later is often your best choice. Women, be sure to take charge of your Social Security claiming options — and if you’re married, don’t let your spouse claim without reviewing all your choices in light of their impact over your life expectancy.
4. Long-term care
There is a picture flying around Facebook of two fun-loving gray haired women with the caption “Reminder: your girlfriends will probably outlive your husbands. So find good ones.”
I fully anticipate that someday I will round up some of my best girlfriends and we’ll form our own version of The Golden Girls. This may not be the traditional approach to planning for long-term care needs, but it is an approach that would work for me.
Your approach to long-term care needs should involve three things:
- Plan on staying strong and healthy — yes, perhaps your gym membership is an integral part of your retirement plan.
- Seek insurance that helps cover in-home care needs. Long-term care insurance covers much needed in-home services that women are likely to need later in life.
- Perhaps like my plan, you want to give some thought on how you might pool social resources later in retirement.
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