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Asking for Directions: Gender and Retirement Planning

The time between beginning to save for retirement and actually retiring is often described as a journey along a path or road. Appropriately, we refer to the steps involved in retirement planning and consulting financial professionals as “asking for directions.”

Yet, unlike a car trip where the consequences might only be a few minutes or hours added on to your trip, poor retirement planning can have much more serious long-term consequences. Therefore, it is important to understand gender differences with regard to household decision-making, how people have prepared and planned for retirement, and to what degree they are using professional financial advice.

Who is driving?

LIMRA Secure Retirement Institute (SRI) recently surveyed Americans aged 50 to 75, involved in household financial decisions and with $100,000 or more in household assets, on their retirement preparedness, planning and use of advisors. Despite three-quarters of respondents being married, a lower proportion of men than women report that they share financial decision-making with others in the household: 30 percent versus 47 percent. Instead, men are more likely than women to describe themselves as the primary decision-maker: 70 percent of men compared with 47 percent of women describe their role that way.


Have they mapped their route?

LIMRA SRI found that women are more likely than men to be concerned about running out of money in retirement: 46 percent versus 35 percent, respectively. This survey also found that although around one in five men and women have a formal written plan to manage their income, assets and expenses during retirement, women are less likely to report the presence of several key plan components in those plans. Specifically, women’s plans are less likely than men’s to include a plan for generating retirement income (64 percent versus 74 percent) and a strategy for claiming Social Security (38 percent versus 49 percent).

Retirement planning activities vary in terms of how long they take to complete as well as in the complexity and expertise required to complete them. Three in five men and women have a plan for managing income, assets and expenses during retirement. Respondents not yet retired were asked which of a list of seven specific tasks they have completed. They are:

  • Determined what Social Security benefits would be at different retirement ages
  • Calculated the amount of assets and investments they will have available to spend in retirement
  • Determined what income will be in retirement
  • Determined what expenses will be in retirement
  • Estimated how many years assets and investments will last in retirement
  • Determined health care coverage in retirement
  • Developed a specific plan or strategy for generating income from retirement savings

Are they asking for directions?

On a positive note, among those surveyed, more women than men work with paid professionals to make at least some investment decisions (63 percent versus 54 percent). Furthermore, approximately one in five women and men have consulted an advisor to a “considerable” extent regarding retirement planning needs. Therefore, there is likely to be room for advisors to grow existing relationships with households through more in-depth discussions about retirement planning needs.

Advisor relationships are critical to completing more complex planning tasks, and women are more likely than men to appreciate the value financial advisors provide.

Becoming a financial advice GPS

Advisors should build on existing relationships with this market segment through discussing their retirement planning needs and assisting with more complicated elements of their retirement plans. Based on these results, it appears women are slightly less prepared than their male counterparts, especially with regard to deploying assets in retirement. Luckily, since women do perceive greater value in using and paying for professional financial advice, they could be more amenable to advisors who offer directions.

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