Women and Retirement — Too Many Money Mistakes Can Lead to Poverty

During my morning reading, I came across – yet another – disturbing article about the financial plight of senior women.

The Columbus Dispatch article, “Too Many Senior Women Live in Poverty,” cites data from the new Census Bureau: 12.1 percent of women 65 or older live in poverty, compared with 7.4 percent of men the same age. It goes on to tell the story of Marjorie Meyers, a retired 68-year-old woman who routinely has to decide between buying food or medicine in order to make ends meet, despite the fact that she had a great job with the state of Ohio for nearly 35 years and a good government pension.

It’s a story that’s becoming too commonplace in our society. Women face harsh financial consequences in retirement, due to the choices they make along the way. In Meyers’ case, she helped raise a granddaughter and refinanced her house six years ago to help two of her three sons complete their education. In my opinion, that was a huge mistake.

Women care too much.

The tendency for women to prioritize caring for loved ones over taking care of themselves causes them to make financially irresponsible choices.

As an example, journalist, author and personal finance expert, Farnoosh Torabi spells out the “3 Common Money Mistakes Women Make” in this Yahoo Finance video.

3 Common Money Mistakes Women Make


Mistake #1 – Harboring guilt.

It appears than women are more likely to harbor guilt around money than men, due to genetics. Guilty thinking causes women to think irrationally. Have you ever hid purchases from your spouse because you felt guilty? I know I have.

Another way guilt shows up for women is in the area of parenting. Women make guilt-based choices, such as quitting their job to stay home with the kids, despite long term financial consequences.

Mistake #2 – Failing to bring in outside help.

Women have a tendency to believe that unless they “do-it-all” themselves, they are falling short in their responsibility to be a good care-giver. Studies show that women rank caring for their families above financial goals. This means they would rather compromise their needs – no matter how justified they may be – in order to tend to the needs of their loved ones.

For instance, guilt will keep women from hiring a housekeeper because of the expense. When in reality (in some cases) bringing in outside help would allow them to utilize their time and energy more efficiently. A simple exercise in doing the math would enable women to make a prudent decision.

Mistake #3 – Putting others first.

This is especially true for women who have nurturer-dominant personalities. As a financial advisor, I saw over and over how this was a detriment for women. The tendency to put others first causes women to neglect their own savings, for instance, while helping out children or aging parents.

Several years ago, a former client, a woman in her early sixties, had an adult child who wanted to buy his first home. He approached my client about borrowing $30,000 from her supplemental retirement savings to go toward his down payment. I advised against it, reasoning that he had plenty of time to save on his own for a down payment, without putting her retirement nest egg in jeopardy. The risk of him losing his job and not being able to pay her back was just too great, especially since she was only a few years out from retirement.

Women need to be more self-centered when it comes to decisions that impact long-term finances .

I believe women need to develop the ability to think objectively. They need to step outside of their habitual thinking patterns in order to make smarter decisions about long term financial security.