{"id":6443,"date":"2017-08-06T18:35:35","date_gmt":"2017-08-06T22:35:35","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=6443"},"modified":"2017-08-07T09:22:06","modified_gmt":"2017-08-07T13:22:06","slug":"four-ways-women-can-get-smarter-about-money","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=6443","title":{"rendered":"Four Ways Women Can Get Smarter About Money"},"content":{"rendered":"
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\"\"<\/a>News flash: Retired women and women nearing retirement have a\u00a0financial literacy<\/a>\u00a0problem. In a\u00a0survey<\/a>\u00a0released today, the 2017 RICP\u00a0Retirement Income Literacy Gender Differences Report, from\u00a0The American College of Financial Services<\/a>, only 18 percent of women age 60 to 75 passed. By contrast, 35 percent of men did (also pretty shabby, if you ask me).<\/p>\n

\u201cI would expect a gap,\u201d said Jamie Hopkins, Retirement Income Program co-director at The American College of Financial Services. \u201cBut it was actually double. That shocked me.\u201d<\/p>\n

The quiz featured a sweep of questions about\u00a0annuities<\/a>, company retirement plans, strategies for keeping an\u00a0income stream in retirement<\/a>, paying for long-term care expenses and Medicare planning. You can take it yourself\u00a0here<\/a>.<\/p>\n

Financial Literacy Gaps on Investing, Saving and Retirement Planning<\/h3>\n

I found particularly significant the yawning gap between women and men when it comes to having a grip on investing, saving and retirement planning.<\/p>\n

There was also a striking disconnect among women between their confidence level of their finances and their knowledge about personal finances. Most of the women surveyed (55 percent) said they were extremely confident they would have enough money to live comfortably in retirement. Only a quarter of those women passed the financial literacy quiz, however.<\/p>\n

Read column on Forbes<\/a><\/strong><\/p>\n

Another disconnect: What married women and men said about who makes the financial decisions in their households. \u201cMost of the women said \u2018We share the responsibility,\u2019\u201d Hopkins said. \u201cAnd almost all of the men who were married said \u2018I am the primary decision maker.\u2019\u201d Added Hopkins: \u201cThey\u2019re not correctly communicating. That shouldn\u2019t be happening.\u201d Specifically, 80 percent of the married women said that they shared the decision making while only 35 percent of married men said they did.<\/p>\n

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Credit: 2017 RICP Retirement Income Literacy Gender Differences Report<\/figcaption><\/figure>\n<\/div>\n

Women, Men and Financial Advisers<\/h3>\n

Here\u2019s a head-scratcher from the survey: Women and men who have financial advisers had lower levels of financial literacy than those who don\u2019t use these money pros.<\/p>\n

Hopkins\u2019 explanation: \u201cPeople who go to advisers are the types who want to delegate. They tend to rely on adviser and are not \u2018do it yourselfers.\u2019\u201d<\/p>\n

Maybe so, but it\u2019s a huge mistake to be in the dark about the basics of personal finance, whether you have an adviser or not.<\/p>\n

The Encouraging News About Older Women and Money<\/h3>\n

Not everything in the survey was discouraging, though, regarding older women and money.<\/p>\n

For starters, the women were more likely to identify themselves as cautious or risk-averse investors than the men surveyed. At their age, this\u00a0is\u00a0<\/em>the time to be conservative about your investment choices. \u201cThere\u2019s a benefit to the group right around retirement to having some restraint and to be more protected,\u201d said Hopkins.<\/p>\n

The women surveyed were also far more concerned about retirement risks than men, especially cuts to Social Security. And they were more worried about the\u00a0cost of health care in retirement<\/a>\u00a0as well as paying for long-term care. My take: Since women are more likely to live longer than men, on average, and to be solo at the end of their lives, they\u2019re smart to be concerned about Social Security cuts, the cost of health care and paying for long-term care.<\/p>\n

Also, the women surveyed were less likely than the men to get financial advice and information from friends: only 27 percent of women consulted friends vs. 39 percent of men. \u201cIn some respects, it\u2019s\u00a0good<\/em>\u00a0that women don\u2019t take advice from friends,\u201d said Jocelyn Wright, State Farm chair in women and financial services and assistant professor of women\u2019s studies at The American College of Financial Services. \u201cYou don\u2019t want to get misinformation and make mistakes.\u201d<\/p>\n

To get financial information, the women were just as likely as men to consult an adviser or a financial services firm. And most of the women surveyed understood the value of a financial adviser. In fact, I\u2019d argue that they understood this\u00a0better<\/em>\u00a0than men.<\/p>\n

Some 55 percent of women with advisers said it is extremely important that their money pro educate them about the\u00a0risks of running out of money in retirement<\/a>; just 42 percent of men felt this way. And 60 percent of women said it\u2019s important to receive education from an adviser about investment management, as opposed to only 47 percent of men.<\/p>\n

A willingness to be open to learning about money and retirement income is essential when it comes to long-term financial security.<\/p>\n

4 Retirement Planning Tips for Women<\/h3>\n

Here are four ways older women can ramp up their literacy and be financially fit in retirement:<\/p>\n

1. Craft a balanced investing strategy.\u00a0<\/strong>The years right before, or in, retirement should be your most conservative as an investor, said Hopkins. That said, he added, \u201cIf you are a woman and expecting to live to 95, you have to invest in equities\u201d to get enough growth in your retirement portfolio.<\/p>\n

When you retire, you might create income for the next three to five years through an annuity or a\u00a0bond ladder<\/a>\u00a0(where bonds mature at different times), so you won\u2019t have to worry about where your money will be coming from, Hopkins advised. Stocks or mutual funds that buy them can fund the latter half of your retirement, he added.<\/p>\n

A traditional rule of thumb for the percentage of your portfolio to keep in stocks: 100 minus your age. In other words, if you\u2019re 60, you\u2019d have 40 percent in stocks. But given the anticipation for longer lifespans, I suggest fine-tuning that rule slightly to 110 minus your age.<\/p>\n

2. Build into your schedule opportunities to learn more about personal finances and investing<\/strong>. \u201cWomen are willing to learn together, so make it a group activity,\u201d said Wright. Many employers offer workplace\u00a0seminars<\/a>\u00a0and planning tools; if yours does, take advantage of this.<\/p>\n

You might also consider starting a\u00a0money book club<\/a>\u00a0with friends and colleagues to read up on investing and retirement planning. If possible, invite a local financial author or financial journalist to make a presentation.<\/p>\n

3. Create a long-term care strategy.\u00a0<\/strong>For a discussion of the pros and cons of buying a long-term care policy, check out Next Avenue Money & Security Editor Richard Eisenberg\u2019s column:\u00a0Should I Buy Long-Term Care Insurance?<\/a><\/p>\n

4. If you\u2019re married or have a partner, have regular money talks with him or her.<\/strong>\u00a0Yes, these can be nerve-wracking, but do it anyway. \u201cMake sure you are having those open communications, so you know what is going on,\u201d said Wright.\u00a0\u201c<\/strong>That way, if your husband predeceases you, you can step right in and are fully aware of the financial situation.\u201d<\/p>\n

When it comes to long-term financial security, regardless of gender, the best investment advice I can give is this: Knowledge really is the secret sauce.<\/p>\n

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\"\"By\u00a0Kerry Hannon,\u00a0<\/a><\/span>Money & Work Expert<\/span><\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n<\/div>\n<\/div>\n
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Kerry Hannon has covered personal finance for Forbes, Money, U.S. News & World Report and USA Today for nearly three decades. She is the author of\u00a0Love Your Job: The New Rules for Career Happiness<\/a><\/em>;\u00a0What’s Next? Follow Your Passion and Find Your Dream Job<\/a>;\u00a0Great Jobs for Everyone 50+<\/a>\u00a0and\u00a0Suddenly Single: Money Skills for Divorcees and Widows<\/em><\/a>. Her website is\u00a0kerryhannon.com<\/a>. Follow her on Twitter\u00a0@kerryhannon<\/a><\/span><\/div>\n<\/div>\n<\/div>\n

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