In my experience, women sabotage their future financial security because they’re more concerned with running out of money in the short term than running out of money later in life. Day-to-day financial matters come first, such as paying for their children’s school expenses and activities, as opposed to saving for their own retirement.
When it does come to retirement saving and planning, women ask me, “Am I saving enough for retirement?” Often my answer is, “No, not enough.” This happens for a variety of reasons, and I’ve heard every excuse in the book as to why women haven’t saved or planned for their retirement. They feel they can’t afford to. Other outstanding debts are more important, such as paying off student loans or credit card debts. They have a mortgage to pay down and a couple of car payments. They’ve been busy raising kids and not working; thus, not contributing to a 401k plan or accumulating a pension plan. Their spouses deal with their finances, and they are out of touch with what they have in assets.
The No. 1 trend I’ve seen more and more of is happening when women go through a divorce. A large number of women will give up their half of the couple’s retirement funding in order to keep their house and children. These women, of course, are only looking at the immediate future and not their long-term financial future.
These trends must change. Women must take control of their own financial future and begin planning for retirement to avoid any missteps along the way. I ask my female credit union members the following, and would encourage you to ask yourself these questions as well:
- What is your financial dream?
- What does your ideal retirement scenario look like?
- What are your current investment assets?
- What are your current outstanding debts?
- If married, is there an earnings gap between you and your spouse?
- Have you been out of the workforce for any point in time?
- Are you planning and saving to reach your financial dream/ideal retirement scenario?
- What is your strategy to reach your financial dream/ideal retirement scenario?
- Have you assessed what you will need and want during your retirement?
The answers I receive to these questions reveal that some women have given up their financial identity. This is an important issue that needs to be remedied because women frequently outlive their male spouses, and then will only receive a portion of their spouses’ retirement plans. In addition, if their spouses had started taking social security benefits early, then that will affect the amount the widows receive as well. Often women forget that their spouses’ Social Security decisions play a role in their financial security as well.
I challenge all credit unions to help their female credit union members reclaim their financial identity by asking them:
- Do you know what kind of accounts you have and where the money is located?
- Do you have an inventory of your investments and savings accounts?
- Do you have balances on those accounts and know what their purpose is?
- Do you know what to do if your spouse suddenly passes away?
- Do you know where you stand financially?
If they can’t answer these questions, or draw a blank look, then I encourage them to find-out. As a credit union, you should encourage both partners in a marriage to be present during investment and retirement planning discussions, so both spouses are financially educated and can answer these questions, too.
Women live longer, have lower-paying jobs, take time off to raise kids, and have smaller retirement funds saved, so it is important credit unions recognize these factors, and then help women build an investment portfolio that can deliver retirement income for years to come. Especially, given women typically are more conservative in their investment selections when they do invest, yet, are more active in their retirement than men.
At your credit union, be sure you’re taking into account women have different financial needs then men, and then, embrace it by taking a different approach to women’s investment and retirement needs.
Anna Kamp works at Anheuser-Busch Employees’ Credit Union in St. Louis as a financial adviser with CUNA Brokerage Services.
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