Our monthly blog, “Money in Motion Remix,” is a reflection of some of the subjects discussed on our weekly radio show broadcasts of “Money in Motion” which airs LIVE every Thursday at 8:05am on News Talk 1310 WIBA FM, where we offer answers to your retirement questions in one place.

Check out previous podcasts at klaasfinancial.com/podcast.

Women and Their Money

We know that while women generally manage the majority of daily financial activities in their households, often they are not involved in the big picture of financial and retirement planning. And although it often makes sense for one person in a household to take the lead for the sake of efficiency, it is truly vital that both have a clear understanding of what their future financial picture looks like leading into retirement.

According to research conducted by McKinsey & Company, women control one-third of total US household financial assets—more than $10 trillion–and by 2030 it is estimated that number will triple. ⁱCouple that with the fact that women statistically live longer than men, and it makes absolute sense for women to ask questions and understand what kind of financial footing they have, or need to have, to plan for their own financial futures.

Two unique retirement planning issues confronting women include lifespan and associated higher health care costs. With lifespan, we know that a 65-year-old woman today statistically may live another 21 years, which is about 3 years longer than the average male. Hence, there are a few more years of retirement expenses that women need to fund.

Alongside longevity comes anticipated higher health care costs. According to a 2018 Fidelity Investments study, ⁱⁱwomen can expect to spend $150,000 in health care costs during retirement. These are costs NOT covered by Medicare. This also leaves out potential long-term care expenses. So, if you are married with the potential of outliving your spouse, you need to plan for the possibility of being solely responsible for your own healthcare and household expenses.

When women are left in the dark on debt levels, life insurance, and retirement readiness, they can be financially unprepared for major life occurrences like getting divorced or becoming widowed, making the financial ramifications overwhelming.

So, our advice is simple:

• If you are female and married, please take an active role in financial decisions in your household. Become aware of what’s going on. Understand what your debts currently look like (mortgage, auto loan and credit card amounts) and how your assets are currently invested. Review monthly or quarterly financial statements to understand what your financial picture looks like and for verification that you know where assets and debts are located.

• Look at the investment risk your household is taking. Are YOU comfortable with this? Women tend to be more conservative investors (risk adverse) than men, which may or may not be a good thing.

• Monitor your credit. Check your credit score to track how things stand and be aware of any potential identity theft.

• Review your savings, and emergency funds. Do you have 6 months of savings?

• Review any life insurance or long-term care insurance policies. Understand what you have and what you don’t have. Understand if some policies have lapsed or if you’re paying current premiums on them.

• Review beneficiaries on all your accounts. Are you and your spouse each other’s beneficiary for investments, life insurance and retirement plans at work?

• Make sure you have a retirement plan in place. A retirement plan answers questions as to when you can stop working and how much you might expect to spend each year. You will get a projection that details what your future income will be comprised of.

• Make sure you understand what your Social Security Benefit will look like at different ages.

• Remember that a man is not a retirement plan!

• SPEAK UP! Many times, women have a hard time discussing their finances. Some say they find the subject is too personal. Others say that they were raised to not talk about finances or that they don’t understand or know how to talk about the subject intelligently. Please find someone that you can trust and who will listen to you, answer your questions, explain things on your level and simply address your specific financial planning needs.

i “Women as the Next Wave of Growth in U.S. Wealth Management,” McKinsey & Company, July 29, 2020.
ii “A Couple Retiring in 2018 Would Need an Estimated $280,000 to Cover Health Care Costs in Retirement, Fidelity® Analysis Shows,” Fidelity, April 19, 2018.