The Truth About Women, Aging and Retirement

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Do you ever worry about ending up “a bag lady”?

If so, you’re not alone. And if current trends don’t change, your fear is not entirely irrational.

Last week, Merrill Lynch hosted an online presentation about the state of women and retirement. In our crazy, busy world, it’s easy to tune out when listening to any presentation—especially one online. This webinar, however, kept me glued to the screen for an hour… and I didn’t even multi-task. Alas, since then I’ve been struggling to find the right words to describe why I found it so gripping. (Watch it yourself here).

Truth About Women, Aging And Retirement

Fast forward to today. As I write this, a friend’s husband has just been rushed to the hospital. He’s dealing with stage 4 cancer, and they have a 5 year-old daughter. In the context of literal life and death, the point of this webinar suddenly became very clear to me. In a word: choice. What I took away from the Merrill Lynch presentation was that in order to have flexibility and choices—especially during life’s inevitable speed bumps—it helps to have your finances squared away. Money can’t solve your problems, but it can be a very useful tool when navigating them.

Yet in order to have money during the rough patches, you’ve got to make some trade-offs ahead of time when things are good, which goes against human nature. To get your wheels spinning about what trade-offs you might want to make now, here are my top three take-aways from the Merrill Lynch “Women and Retirement” webinar.

For retirees, the healthcare estimate is $170,000 for a man versus $240,000 for a woman.

Women Need to Save More Money Than Men

You’ve heard it before, but it’s worth saying again: Women live longer than men. Just look at the male/female ratio in nursing care facilities. Therefore, we need to save more than men to support ourselves in our old age. Panel moderator and former ABC World News Tonight anchor Charlie Gibson highlighted healthcare estimates for retirees: The estimate is $170,000 for a man versus $240,000 for a woman. Alas, women today are retiring with two-thirds of the assets of men, according to Sallie Krawcheck, President of Merrill Lynch Global Wealth and Investment Management. (Find out your options for retirement accounts.)

Women Face Unique Saving Challenges

Women are still doing two times the housework and three times the childcare of men—simply finding the time to focus on finances is a challenge. An additional challenge is that we’re not asking for raises at nearly the same rate as men (Krawcheck estimated that men and women ask her for raises at a rate of 50-to-1. Fellow panelist and USA Network founder Kay Koplovitz concurred). “Asking for it,” financially speaking, is a topic I’ve discussed in the past and if reader emails are any measure, many women struggle with this.  Furthermore, when women step out of the workforce to care for kids or aging parents, they see a nearly 15% drop in earnings after just one year. The drop in earnings grows to nearly 50% if they stay out of the workforce for three or more years. Ouch.

Women Respond Differently to Financial Industry Messages

Research shows that both men and women get confused when listening to financial jargon. Men don’t let that confusion bother them, but women are turned off the subject altogether. Both Koplovitz and former Morgan Stanley financial advisor and best selling personal finance author David Bach commented on how the dynamic of financial discussions shifts dramatically when even a few men join a group of women. Alas, men are still doing most of the talking in the financial services industry.

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So, What Does This Mean for You?

Money matters are stressful for both genders. As our nation’s economic foundation continues to shake, rattle and roll, we all need to learn new skills. But listening to this webinar reminded me yet again how vital it is for women to master their money. If there is one piece of financial advice I’d like to highlight, it would be Krawcheck’s observation that women need to save “first, harder and faster.” Or, as I like to say, the three most powerful words in all of personal finance are “start saving now.”

Choose the right way to save for your future. Read this.

What concerns or questions do you have about aging and retirement?