AARP study shows only 9% of women feel very confident that they will retire comfortably. Experts weight in
By Deborah Jeanne Sergeant
Many women aged 50–64 face financial hardship, both for affording day-to-day needs and for retirement savings, according to a recent AARP study.
Two-thirds feel concern that prices are rising more quickly than their income. Nearly half scrimped on health expenses because of costs, including missing or reducing doses of prescriptions. For 42%, an unexpected expense of $1,000 would be a major financial setback. Only 9% feel very confident that they will retire comfortably.
The reasons are more complex than pointing at the issues arising from the pandemic. Several factors may have placed these women on shaky ground financially, including domestic violence (which often includes financial abuse and is oriented towards women 97% of the time, according to the FBI), midlife divorce or widowhood, reduced earning potential because of childrearing, reduced earning potential because of providing elder care, and operating a family business or consulting business that has no retirement savings plans.
Short of a time machine to go back and make other choices, women do have options for getting into better financial shape.
Three experts suggest tips women can use to revert that trend.
• “Medicare is the Promised Land for retirees. If you’re 63 and in a position to retire, you’re looking at the better part of $1,000 a month for healthcare and that’s before the $5,000 deductible has been met. For women, it’s probably acute because the two spouses working family structure is common. Oftentimes, in a typical couple, the husband may have the higher paying, more generous benefit. The mother often takes part-time work that doesn’t have bennies. If things don’t work out, they don’t have access to those benefits.
• “To say there aren’t tough choices to be made is painting a rosy picture. You must make difficult choices. She doesn’t have the privilege to help her children. She’s got to start making the choices that her survival must be her primary objective. She must look at her lifestyle and see how modestly she lives. She may need to look at a low-cost apartment. Rent isn’t the end of the world. You don’t need home equity when you die.
• “More and more of my clients have a mortgage in retirement.
• “To budget, start with a $0 and then begin adding in things you have to have. Everything else is extra. That’s the mindset people have to have. You’re not doing your child any favors covering their cell phone bill.
• “Cohabitating can benefit everyone with cheaper childcare and cheaper living expenses.”
— Dean Ripley, wealth management adviser, certified financial planner and principal and founder of Garlock & Associates Financial Planning Group, Phoenix.
• “The first step is to get your affairs in order. Put together a list of assets and liabilities, review insurance policies, your estate plan (i.e. will, trusts, etc.), and create a budget. There are plenty of free apps available that can help you. Mint, Personal Capital and Truebill are a few or your bank may also have a service available to you.
• “There is a little-used strategy called a “reverse budget.” With a reverse budget, you fund your savings goals first then pay your bills. It sounds odd but this will essentially force you to prioritize every expense and cut out what is unneeded.
• “If your employer offers a retirement plan with a match, make sure you’re taking advantage of that and getting the maximum amount allowed.
• “Everyone is different and if you need additional help, reach out to a professional for a more personalized plan.”
— Ryan York, president, investment adviser representative and portfolio manager at York Wealth Management, Syracuse.
• “Work longer. You can go to work if you haven’t been working and try to find an occupation you can do for a long time to supplement your other income sources. There is a fair amount of publicity about the number of retirees who’ve left the workforce because of the pandemic. It’s making a fairly significant difference in the percent of the population that’s employed.
• “Look at ways to reduce expenses like reviewing your cell phone bill. Drop the landline if you don’t need it. Instead of cable TV, there are many more internet options that are more affordable.
You can always reconsider your housing and find something less expensive. A person who’s in a senior citizen age range over 60 might want to look at subsidized housing if their income is such that they don’t have a significant annual income.
• “Reverse mortgage can fit for very specific circumstance. It’s for someone who really wants to remain in the home and has a lot of equity and is an expensive home. They need to understand how the structure works, as these are complex instruments and have a lot of details associated with them. It is not a good idea for a broad swath of the population.
• “In general, getting rid of debt is important but it depends on the person’s circumstances and the cost of the debt.
• “There are tax consequences of liquidating assets. You need to get to a point where you are earning interest on your money rather than paying interest on someone else’s money.”
— Randy L. Zeigler, certified financial planner and private wealth adviser with Ameriprise Financial Services, LLC, Oswego