Americans aren’t saving enough, in general. And women, in particular, have reasons to be concerned.
They live longer, which means their savings must last longer.
Because of persistent wage gaps by gender, they often earn less than male counterparts. And at least some women will have employment gaps, if they take time out of the workforce to care for children. According to Bloomberg News, a national survey found one-quarter of mothers of preschool-aged children were not in the workforce.
For all of these reasons, women need to take a realistic look at their assets as they approach retirement and make decisions that will strengthen their position. Wealth and financial planners say they aren’t necessarily advising women any differently than men but take into consideration the circumstances that they may face.
“I don’t think we can generalize about women or men, I think the same principles apply,” said Joan Caine, director of investments for the Westerly-based The Washington Trust Co.
For both genders, Caine sees a need for financial education in schools, early on, before they become working adults and start to make mistakes that can cost them dearly.
Women do have particular challenges – most often having a gap in their career – which can lower their retirement savings and future Social Security earnings. For women who are married, or have a partner, the deficit in years worked remains an issue if their spouse or partner dies.
“That probably is the one distinguishing factor with women,” Caine said. “It can hurt you in the future if you don’t still have your partner, or two incomes. It’s not the end of the world. You have to change your spending pattern.”
Should women be advised to invest more aggressively, to gain lost ground? Advisers say it all depends on the assets. In a recent interview, Malcolm Makin, president of the Professional Planning Group, based in Westerly, said his first client that morning was a woman who had been widowed as a young woman with small children.
Over the years, her investment mix has turned from conservative to more aggressive. “Over the years, we got her up to a 60-40 balance. She’s done phenomenally well.”
Makin’s company advises investors who have a minimum of $500,000 in manageable assets.
Many of his clients are concerned about making the money last and grow.
Do women have to be nudged to invest? That’s a stereotype, he says. He does have many clients who are men and making the investment decisions. In some cases, it’s because they prefer to do it, in others because their spouses don’t want to be involved.
But it’s critical for women to be involved and at the table when the decisions are made, Makin said.
“They each have a common goal and they each have separate issues. The separate issues are: What happens when the first of them passes? What do they want as a couple to happen? Second issue, for the man, if he passes first, how does he make sure his wife is both protected and in good hands so the work they’ve done over the years continues, and she doesn’t get taken advantage of? Or [what if she] feels so threatened that she puts all of her money in CDs and does nothing?”
For women who find their assets short, the solution to finding more to invest may not be to earn more, but to spend less.
The rule of thumb in retirement is to not spend any more than 4-5 percent of your portfolio, Caine said.
One of the most proactive steps people can take, Caine said, is to look at expenses and cash flow.
If a woman becomes widowed or divorced, the financial planning will consider downsizing by selling a home. That can be an option if they are stretched for cash. Staying at home, out of the workforce, is an option exercised by many women, but it comes at a cost.
“Later on, they realize, ‘Wow, I don’t have that income.’ They may be divorced, or their husband is deceased. And it comes as a surprise to a lot of people,” Caine said.
