Participating members:
Clay Gillespie, CFP, CLU, 23-year MDRT member and MDRT Second Vice President from Vancouver, British Columbia, Canada
Twyla Dawn Hardham, CFP, seven-year MDRT member from Kelowna, British Columbia, Canada
Barbara A. Pietrangelo, CFP, ChFC, 27-year MDRT member from Ada, Michigan, USA
MDRT members discussed during a recent MDRT webinar some of the general challenges women face, both financial and non-financial, regarding planning for retirement (see the full episode at mdrt.org/retirement-challenges-for-women).
Pietrangelo: I’m finding that women as a whole live longer than men, generally seven to 10 years longer, and because women often will leave a career for a time to care for their family, their wages are less, and they have less savings to go into retirement. Women are more likely to be alone in retirement, and then the issue becomes care. One of the quotes I heard as a new agent was “The only woman who’s going to take care of the older woman you’re going to be is the younger woman you are today.” So often, women take care of their kids, grandkids, parents and siblings, and then they’re out of money and there’s no one left to take care of them. So, my recommendation for women is four steps of planning: Set goals, prioritize those goals, take action and review regularly. The hard part sometimes is taking action, because you hear one thing on the web, another thing from your friend, another thing at work and then people tend to not do anything. Taking action and reviewing regularly is especially important for women.
Gillespie: It’s the mathematics of retirement and life expectancy that’s a big deal for women. We worked out that a female has to save 8.5% to 9.5% more than a male to have the same standard of living through their life expectancy. You see it in the products too. If you go buy a life annuity, women get a lower amount than the male who generates more money at less cost for their expected lifetime.
I suggest people take three to six months of credit card statements, bank statements and really look at how they’re spending their money. The charge and bank statements don’t lie.
—Barbara Pietrangelo
Hardham: If you want to set yourself apart, it’s really taking the time to understand what the women who are seeing you need and what keeps them up at night. Barbara did an excellent job touching on the gender pay gap, longer life expectancy and career breaks for caregiving. I’ve been part of that sandwich generation. I have grandkids, and I’ve had to take care of my parents. So just understanding that and having walked through that has given me a completely different set of eyes when I’m meeting with women and empathizing with the burdens and the challenges they go through. I think advisors need to customize content for women and say, “These are the things that are specific to you.” Clay did a great job speaking to the numbers, and it’s really critical that we show that it is not the same for men as it is for women. I like to address unique challenges they face by covering topics like budgeting, saving and understanding how their credit score impacts them. When I’m meeting with a husband and wife, often the husband will say, “Oh, she doesn’t do finances, so I’ll just attend.” I don’t allow that in my practice. I say, “No, your wife needs to come, and we need to sit as a team, so everybody understands what’s going on.” Then we drilled right down to the basics, making sure that she has established her credit rating. Often, I find among my older clients that the women may not have established a credit score because their husband did it all. It’s just unveiling those things that need to be addressed before it’s too late when their spouse passes away and the wife hasn’t established a credit rating.
Gillespie: I’ve never let clients not meet as a couple. The dynamics are interesting where a male will look at their life expectancy and figure that all they need is a family plan, so we have to bring up the discussion about the joint life expectancy we’re worried about. My joke is “I don’t care about you, Mr. Smith, because your wife is going to outlive you by 10 years, so she’s the one I care about more.” It’s important to get that point through in their planning, so clients understand that there is a difference, even if they’re a married couple. There are more things you have to prepare for than just the male life expectancy. One of the phrases I use when I’m dealing with clients is “Friends and family give you well-meaning, bad advice. My job is to give you information. You can make an informed decision, and I can’t help it whether you like the advice or not.” So, I set the tone that I’m an advice giver. I’m there to give them advice so they can make an informed decision.
Hardham: It’s also about encouraging women to start retirement planning as early as possible. I know when I started, I was a single mom, in the red every month, and I had no money. Probably the best advice I was ever given was “Just do something.” So, I did something consistent. I saved $25 a month. I remember $25 a month back then was a big deal to me, but I just committed to do it even though the budget didn’t make sense for it. I was able to grow that, and then I became an advisor. I saw the power of early compounding. I encourage women to do long-term saving and to save consistently. And we do road mapping as well for costs that are coming in the future, like health care. We also talk about delaying Social Security or delaying the Canadian Pension Plan with my clients. Does it make sense to take the income now or to delay and collect a better amount in the future during your retirement? And then annuities are making a comeback. I’m glad to see that, as increased interest rates are having a good effect. Annuities are something that I think we should reconsider and start having as part of women’s portfolios as well as those guaranteed income products. There are very few of them now, but I think if we can put a portion of the portfolio in those products, it removes some of the worry. Also, coordinating spousal plans to maximize the benefits, regular reviews, adjustments, and making sure that they’re on track and see how we are doing.
Pietrangelo: When it comes to helping women plan their future, one of the big things is how much income you are going to need when you retire. I found that very few people are good at budgeting. So, I suggest people take three to six months of credit card statements, bank statements and really look at how they’re spending their money. People are sometimes shocked at how much they spend going out to eat, for personal care or a variety of things, how much they’re giving to their kids. The charge and bank statements don’t lie. They show how you’re actually spending your money. I think that’s important to try to help people get a handle that possibly will help you free up some extra cash for a life insurance policy or some care policies or something like that. Speaking of which, there’s approximately a 43% chance that we’re all going to need nursing home care. I always say I hope it’s the people down the street and not us, but there is a chance that we’re all going to need some form of care. We’re running into that more and more, so one of the biggest gifts you can give your family is having a plan for that.
