What Does Gender Have to Do With Retirement?

When it comes to planning for retirement, women feel less prepared than men. That’s according to the New Retirement Mindscape® 2013 City Pulse index survey, commissioned by Ameriprise Financial. Only 38 percent of women surveyed say that they feel on track for retirement (or the remainder of retirement) compared to 46 percent of men.

Women’s lack of confidence in the realm of retirement readiness may be tied in part to planning. Seventy-five percent of men surveyed reported that they’ve done at least some preparation for retirement, compared to 70 percent of women. And over half of men (55 percent) say they’ve contributed to a 401(k) plan, while only 47 percent of women claim they’ve done the same.

What accounts for the gender divide? It may have to with the fact that women often face three unique financial hurdles on the road to retirement, including:

1. Women often take time away from work to be caregivers. While caregiving is often the best option for a family’s situation, the reality is that spending time out of the workforce — whether to raise children or to provide care for a family member — can have a negative impact on one’s earning potential. Women (and men) who anticipate pausing their careers at some point in time to focus on other priorities should consider setting aside extra money at other times when they’re able to do so, in order to offset the loss of income.
2. On average women live longer than men. This results in the need for additional retirement funds and increased health and long-term care costs. Yet, only 15 percent of women surveyed in the New Retirement Mindscape survey say that they’ve estimated the amount of money they’ll need to pay for healthcare during retirement, compared to 21 percent of men. It’s critical to create a plan for how you’re going to handle healthcare expenses.
3. Women tend to be more conservative with investments. This may not be all bad, but defining and taking the appropriate amount of risk with your investment portfolio may be beneficial. Although, it’s important to have a balanced approach in your investments.

Gender aside, baby boomers are feeling unprepared for retirement. With fewer years left to build up a nest egg, it’s important to focus on what you can control. Here are five steps you can take to feel more prepared for retirement:

1. Think about what you want retirement to look like. Do you want to travel? Relocate? Spend more time with your grandkids? When you have a clear vision of retirement, it’s easier to determine what it will take to get there.
2. Take advantage of employer-sponsored retirement plans. Make sure you’re maxing out your 401(k) contributions if you’re able. If you’re selfemployed, take the time to establish your own retirement plan.
3. Consider purchasing long-term care insurance.
4. Break down your expenses into two categories — essential and lifestyle. Determine if there’s anything you could forego on the lifestyle side.
5. Focus on saving more, especially while you’re still working.

Planning for retirement is complex and it’s not the same for everyone. Each person’s situation is unique. The key is to outline your goals for retirement, and then determining a path to get there. Consider meeting with a financial advisor who can help you with this.

Michael W. K. Yee at (808) 952-1222 ext. 1240

Michael W K Yee, CFP®, CFS®, CRPC®, is a Financial Advisor and CERTIFIED FINANCIAL PLANNER practitioner™ with Ameriprise Financial Services, Inc. in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 25 years. To contact him, michael.w.yee@ampf.com, 808.952.1222 ext 1240, 1585 Kapiolani Blvd., Suite 1100 Honolulu, Hawai‘i 96814.
Advisor is licensed/registered to do business with U.S. residents only in the states of Honolulu, Hawai‘i.
1 The Money Across Generations IISM study was commissioned by Ameriprise Financial, Inc. and conducted by telephone by GfK in December 2011 among 1,006 affluent baby boomers (those with $100,000 or more in investable assets); 300 parents of baby boomers; and 300 children of baby boomers at least 18 years old. The margin of error is +/- three percentage points for the affluent boomers segment and +/- six percentage points for the parents and children of boomers segments.
2 United States Department of Labor, Wage and Hour Division, Family and Medical Leave Act http://www.dol.gov/whd/fmla/
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