Why Retired Women Are More Prone To Financial Crisis
When it comes to financial and consumer products it appears that no matter how you slice it, women seem to be getting the shorter end of the stick.
They earn less than men, work less than men because many of them have had to take time away from the workforce to raise children or take care of their aging parents and have the ‘Pink Tax’ to contend with. A tax in which women pay more than men for the same products or services – dry-cleaning, clothing, even razors. And although women live longer than men (yes!), that comes with a price too. It means that they need to find a way to make the fewer dollars that they make stretch longer.
Considering the societal norms where women were often left out of the workforce and financial matters, it isn’t surprising that women are less financially versed than their male counterparts.
For instance, per an annual survey by the Transamerica Center for Retirement, 68 percent of men say they are confident that they will retire comfortably; just 55 percent of their female counterparts feel the same.
Jeannette Bajalia, a retirement-income planner, president of Woman’s Worth® (www.womans-worth.com) and author of Retirement Done Right and Wi$e Up Women sheds light on why women are more prone to financial crises:
“In most cases, women have earned less than men over the years,” Bajalia says. “They also often have stepped out of the workforce for several years for caregiving roles, whether to raise children or care for aging parents.”
While it’s true that both men and women face obstacles and challenges when planning for retirement, financial advisors like Bajalia agree that women often travel a thornier path. In addition to battling societal norms and work history, other factors can cause women to plunge further into financial difficulties. Among them: longevity, widowhood and divorce.
On Longevity Bajalia says that while people, in general, live longer these days, women live longer than men. While this is a good news in sort of a weird way, this poses a bigger problem for women.
“Even if a woman has substantial savings, if you want to hold onto your wealth you need to hold onto your health,” she says. “So you need to build into your retirement planning the cost of health care, and not just routine and preventive care, but long-term care. And the cost of long-term care is skyrocketing.”
Bajalia’s advice aligns with the experiences of those who have retired or on the cusp of retirement, highlighted in this Infographic: 8 key things to consider if you really want to enjoy your golden years. And what’s the biggest regret retirees have in retirement? Not saving enough for healthcare.
Then there’s widowhood. Because women live longer than men, it totally makes sense that more women than men become widows in their golden years – an event that may create both emotional and financial turmoil.
Bagalia says, “If both are drawing Social Security, one of those checks is going away. If the husband had a pension, that check could also disappear or be reduced. Often, the husband handled the finances. The wife might not even have known about all the investments or where documents are stored. That’s why it’s important for a couple to take the time to review their assets together so that both have a good understanding of what’s there and what’s needed for a secure retirement.”
Albeit a common scenario, it is one that can be avoided with communication and financial planning. Consolidated Credit offers tips to guide widows on the financial steps to take after the death of your spouse.
And then there’s the d-word. No, not debt, the other one – divorce, which by the way, can lead to debt. Just like widowhood, divorce can wreak havoc on a person’s financial well-being, regardless of age.
“When you’re in your 30s or early 40s, you have time to overcome some of the difficulties a divorce creates, but when you’re older, that becomes more challenging,” Bajalia says. “I encourage women in this situation to get a ‘financial physical’ before a divorce is finalized to ensure they are protected with the strategies they need, and that those are included in the divorce decree.”
Consolidated Credit, in its continuing efforts to spread financial education, offers steps you can take to prepare yourself and finances for a divorce.
Retirement can be a scary prospect for many. Although women face unique risks in retirement planning, it is quite possible to retire successfully.
So what can women do to make sure they’re prepared for retirement, regardless of the odds stacked against them?
One word: plan.
Admittedly, the road to retirement isn’t the same for everyone; but if you want to retire on time, in the way that you want, there are key milestones you need to hit along the way. Whether on your own or enlisting the help of a retirement planner, having a plan is key to living the life you want in retirement.
“Ideally, you need a team of experts in estate planning, tax planning, financial planning and health care planning,” Bajalia advises. “All of us would like to age with grace, dignity and respect. To do that, you need to make sure you have the tools in place at an emotional, physical, spiritual and financial level.”
Although men and women both face obstacles and challenges in planning for retirement and women often travel a thornier path, there are ways to journey through the thorns to create the life you want in retirement.