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&l;em&g;Women historically have let men plan for retirement. The old rules have changed, but women still are searching for how should navigate the path to post-work life. And that path is different than it is for men. Diane Bourdo, president of the &l;a href=&q;https://humphreysgroup.com/&q; target=&q;_blank&q;&g;Humphreys Group &l;/a&g;in San Francisco, and author of the book, &l;/em&g;&l;em&g;&l;a href=&q;https://humphreysgroup.com/women-money-myths/&q; target=&q;_blank&q;&g;Rewriting the Rules: Telling Truths About Women and Money&l;/a&g;,&l;/em&g;&l;em&g; has some good advice on how to do this:&l;/em&g;
&l;strong&g;Larry Light:&l;/strong&g; How is retirement planning different for women?
&l;strong&g;Diane Bourdo: &l;/strong&g;Most retirement role models of the past were men, who seemed to relish their move from work by devoting their days to leisure activities and hobbies, tinkering around the house, sitting in front of the television or traveling to sunny climates. many women have had few examples and no clear expectations of how to experience their retirements, outside of continuing to be caretakers and homemakers.
What a difference a few decades makes. For most women, the plans or expectations we had when we were younger about what it would be like to age &a;mdash; into our 50s, 60s, 70s and beyond &a;mdash; have changed. While previous generations could expect to work in a single field at a single career, then retire and begin the process of slowing down mentally and physically, many women today have opportunities to delve into encore careers. They are re-inventing themselves in their professional as well as personal lives &a;mdash; and redefining retirement on their terms.
&l;strong&g;Light:&l;/strong&g; And women&a;rsquo;s financial status has changed, right?
&l;strong&g;Bourdo:&l;/strong&g; Perhaps what is most exciting about this new, reinvigorated take on retirement is the economic advantage women have gained over the past decade. Today, women are the primary breadwinners in 40% of U.S. households, and $14 trillion of the nation&a;rsquo;s personal wealth is controlled by women &a;mdash; a number that is on the rise.
&l;strong&g;Light:&l;/strong&g; What steps should they take?
&l;strong&g;Bourdo:&l;/strong&g; The first is to look within. Consider this question to jump-start thinking about your retirement experience: What do you want your life to look like in 10, 20 or 30 years? This is not so farfetched, as financial planners are increasingly projecting client lifespans of 100 years.
Do you want to work? Travel? Get more education? Will you be a caretaker? A volunteer? A mentor? Will you embark on a new career or creative project? How busy do you want to be? Who do you want to be to and for others? Who do you want to be to and for&a;nbsp;&l;em&g;yourself&l;/em&g;? Spend some time really visualizing what you expect retirement to look like.
&l;strong&g;Light:&l;/strong&g; What&a;rsquo;s the second step?
&l;strong&g;Bourdo:&l;/strong&g; Harness your strengths. &l;a href=&q;https://humphreysgroup.com/women-money-myths/&q; target=&q;_blank&q;&g;In our new book&l;/a&g;, my colleague, Hallie Kraus, and I explore a myth that so many of us &a;mdash; both men and women alike &a;mdash; have been conditioned to believe: Women lack financial confidence, especially when it comes to investing. But the data and research on the topic begs to differ. With women&a;rsquo;s economic influence on the rise, it appears investing is the next hurdle they are ready to jump.
In 2015, Merrill Lynch found that just over 50% of women said they wanted to participate in making changes to their investment approach&a;mdash;nearly mirroring the 55% of men who said the same. And when Fidelity asked what women would most like to learn with 60 minutes of professional financial advice, the first choice listed by women in every age group was, &a;ldquo;learning more about how to invest my money.&a;rdquo;
Remember that diversification is your friend&l;strong&g;. &l;/strong&g;You can reduce risk by diversifying across various different types of investments, investing consistently over time and maintaining a long-term investment horizon. In addition, think about your risk capacity. How much risk you are able to take on, given your resources, expertise and plan) versus your risk tolerance (how emotionally comfortable you are with taking investment risk.
&l;strong&g;Light:&l;/strong&g; And no doubt some good guidance would help.
&l;strong&g;Bourdo:&l;/strong&g; Yes, the third step is to think about the type of advice you need. In writing our book, Hallie and I spent a lot of time discussing another myth that seems to come up again and again: Women aren&a;rsquo;t interested in investing. Since our firm&a;rsquo;s founding in 1983, women have traditionally represented about 70% of our client base&a;mdash;so we know from experience that there are plenty of women asking tough investment questions and those who are eager to drill down into the data, especially when it comes to investing for their retirement.
&l;strong&g;&a;nbsp;&l;/strong&g;Before they reach their golden years, we encourage women to enlist the help of a qualified, professional financial advisor. A lot of women serve as the chief financial officer for their families, so they like to have a hand in the planning process. Think about what tasks you should delegate, and what you should keep in-house. Find and work with advisors who support and respect you. The &l;a href=&q;http://www.plannersearch.org/&q; target=&q;_blank&q;&g;Financial Planning Association (FPA)&l;/a&g; and the &l;a href=&q;https://www.napfa.org/find-%20an-advisor#tab=filters&q; target=&q;_blank&q;&g;National Association of Personal Financial Advisors (NAPFA)&l;/a&g; offer some great online resources that can help you navigate the search process.
&l;strong&g;Light:&l;/strong&g; What else?
&l;strong&g;Bourdo:&l;/strong&g;&a;nbsp;Fourth, know the risks, and plan accordingly. Many financial pundits and thought leaders have stressed how issues like longevity and the wage gap impact retirement readiness and overall financial wellness for women. But perhaps the more insidious factor endangering women&a;rsquo;s retirement is our tendency to take on caregiving responsibilities for our families.
Women make up two-thirds of all caregivers, and while some are able to balance this responsibility with maintaining their day jobs, they are often forced to take time out of the workforce. In fact, women who quit their jobs to care for children or elderly family members lose an average of $324,000 in wages and benefits over their lifetime.
If 401(k) savings aren&a;rsquo;t going to be enough to sustain your lifestyle in retirement, revisit your budget and assess whether or not there is room for you to save more. The easiest thing you can do to improve your financial health is to track your income and expenses. Are you under-earning or overspending? Some of both?
Tracking and categorizing your expenses can be tedious and daunting, so approach it with the mindset that it&a;rsquo;s just data &a;mdash; data that is necessary to evaluate whether you should make spending shifts and how to make them. And most importantly, the exercise will give you the information you need to evaluate trade-offs, make informed decisions and feel confident. Making small course-corrections to your spending and retirement contributions now will have a far greater impact than large corrections you make later on.
Of course, if you have access to a 401(k) plan, you should definitely contribute to it, at least enough to equal your employer&a;rsquo;s matching contributions. But you also should think about supplementing your savings with a health savings account (HSA), a traditional IRA or a Roth IRA. If you&a;rsquo;re self-employed, consider supplementing with a SEP IRA.
&l;strong&g;Light:&l;/strong&g; What&a;rsquo;s a good checklist to follow?
&l;strong&g;Bourdo:&l;/strong&g; Fifth, keep the planning momentum going once you&a;rsquo;re ready to start your second act. Here are a few to-do list items you should prioritize.
Consider obtaining long-term care insurance, especially if you have a family history that indicates you may experience health challenges later in life. Such policies can be costly, yes, but they can make a world of difference.
Rollover your 401(k) assets into an IRA, and work with your advisor to create a tax-efficient withdrawal strategy that provides you with income security to achieve your goals and live the life you want.
Create a budget and spending plan, and make sure you have a solid cushion of cash reserves on-hand. Many advisors recommend having at least three to six months&a;rsquo; worth of living expenses in savings to tide you over in case of an emergency.
Determine when to take Medicare and Social Security benefits. Your advisor can help you make the decision that suits your specific needs and financial situation.
We spend the bulk of our working years being shaped, or even limited by, social constructs, norms and expectations regarding what we can and should do &a;mdash; and that includes how we should spend our retirement.
As the poet Mary Oliver wondered: &a;ldquo;What is it that you plan to do with your one wild and precious life?&a;rdquo;&l;/p&g;