Welcome to today's episode. I'm Tina Beckwith, chief marketing officer with LIMRA and LOMA, and I'm thrilled to be joined by Jean Chatzky, who's an award-winning financial journalist and founder of Her Money.
Jean is also an education fellow with the Retirement Income Institute.
Now, when we talk about retirement planning, it's impossible to ignore the fact that women face a very different set of challenges than men do.
On average, women live longer, they earn less over their lifetime, and are more likely to take time out of the workforce for caregiving.
And at the end of the day, that translates into lower retirement savings and lower Social Security benefits. For example, the median retirement savings for peak boomer women, those at the tail end of the boomer generation, are about a hundred and eighty-five thousand compared to two hundred and sixty-nine thousand for men.
And women's median Social Security benefit is about twenty-one thousand dollars, nearly a third less than men's.
Now though women tell us that protection is a top priority when planning for retirement, fewer women understand annuities and the role that they can play in providing protected lifetime income.
Only 39 percent of women say that they understand annuities, compared to 52 percent of men.
Now despite this, nearly half of women ages sixty-one to sixty-five are interested in owning an annuity for guaranteed lifetime income.
That outpaces men by more than ten percentage points.
And all of this tells us something critical.
Women want solutions that protect their future, but they aren't always getting the information that they need and guidance in order to make those decisions.
That's why today's conversation is so important.
So, Jean, welcome. Thank you. Really looking forward to having this conversation with you.
Me too. Thanks for having me.
Absolutely. Now, when it comes to retirement planning, you know, why is there such a big difference between men and women?
You laid it out. It's systemic and quite honestly, we can't get a break. They released the latest figures on the wage gap just last week; we're down two cents from last year. So, we had actually made some headway where women were earning eighty-three cents to every dollar that a man earned.
We've taken a step back to eighty-one cents and that's just part of the problem. It's childcare, it's caring for our older parents, it's the fact that when we put money into our retirement accounts, we're doing it at those lower salaries over those periods of time that are often disjointed. Jointed. You get to the end of the road. You've got a smaller balance in that retirement account. And then we go on to outlive men by about six years, which means that we need that smaller amount of money to last a longer period of time.
And one of the things that we don't talk about enough is that with those later years, that's when you get into the health care and long-term care expenditures often associated with memory care that can really eat up a dollar.
It's incredible to hear those statistics and how perhaps we've taken this step back. And, you know, understanding that women are also really poised to inherit a significant amount of wealth, what, thirty trillion dollars?
How are financial professionals helping them, and what are some of the challenges that they run into?
Well, this is the good part of the equation. Right? I mean, we should focus on the fact that there is this silver lining. There is a huge amount of money that is expected to come into the hands of women over the next couple of decades.
The reason that this is happening is because women will inherit twice. We're going to inherit both from our parents and we're going to inherit from those husbands that will outlive.
As a result, we are going to be sitting on a lot of money and unfortunately not enough financial advisors are talking to us about what our options are and how we should best put that money to use. I know that you are intimately familiar with the statistic that seventy percent of women choose to leave an advisor relationship after the death of a spouse. The reason that happens is because the relationship doesn't feel owned by the woman. It feels like, oh, well, this was his guy.
This was his guy. Now maybe I should find a person, guy or woman, because most financial advisors are still men, of my own.
And it is about the relationship and building that trust.
Right? And why is it that women typically don't work with financial professionals as much as men do?
I think we have not felt as integral in the relationships. Look, a lot of this is still baked in. If you if you look at the earnings history of women over the years, men have still been the primary wage earner. No point was that more clear than during the pandemic where we saw one wage earner had to step out and stay home to keep everything running.
Most often it was the woman. Woman took a huge step back at that point. But whoever is bringing in the money has tended to have the power to control the investments, to control what happens, you know, to the money in the family, make sure that the decisions are going along on a particular track, and to make the decisions about who's going to help us. And so, if you've got a busy family and one person is managing the investments, one person will traditionally manage that investment relationship.
Now that's not the way it should be, nor is it the way that advisors should want it to be. Precisely because of all the stuff that we've already talked about, about women outliving men, about us ending up with the money. It is crucial for men to and male advisors and all advisors to understand our needs, to understand what we want. You mentioned at the at the top of the show, that I run a company called HerMoney.
We are a big community of Gen X women. We've got a few boomers, we've got a few Xers, but really, we are a big community of affluent, educated, Gen X women. I talk to these women and what they want is safety. What they want is security.
What they want is stability.
They don't exactly know how to get it, but they can describe the feeling of what they want.
And why is it that you think women have, more interest in protected income than men do?
Boy, there are a lot of reasons. Part of it is that I think women have not felt as safe and secure in our lives and in our surroundings. When you look at crime statistics, right, women are the ones who are victims of stalking. Women are the ones who are not safe walking home in their own neighborhoods at night no matter what country you're in.
Right. So, some of it is that. Some of it is that we have watched our mothers and our grandmothers outlive our fathers and our grandfathers and be at a loss for how to handle the money, for what to do, and we don't want that to happen to us. But I also think we have been listening to the fact that we are going to potentially live these incredibly long lives.
And after working for decades, we don't want to have to suffer through a bout of lifestyle deflation. Right? We want to be able to continue our lives. We want to be able to help our kids and help our grandkids in our communities.
And those things are possible, but decumulation, the idea of taking this sum of money that you've saved for retirement is and figuring out how to spread it out so that it doesn't run out before you do, is roundly considered to be the toughest financial problem there is.
And so, we need solutions and advisors who can help us figure it out in a way that feels palatable to us.
Yeah. And that's so interesting because to your point, women want to maintain their quality of life as they continue to age and finding that right solution is a critical piece of it.
One of the big differences between men and women that I have noted in years of reporting on this stuff, men want to make as much money as possible.
Men want to win. Right?
And I'm speaking I'm speaking in generality. There are a lot of women who want to win too, right? Sometimes I really want to win but women want to make enough money to reach the goal.
And I think more women are when they know that they can reach the goal and sustain that lifestyle are happy with that, are satisfied with that, are not going to suffer from incredible bouts of FOMO because the market's doing this over there. As long as we know that we've got our paycheck coming in for the rest of our lives, we're going to feel okay.
And you all have the products to do that, but as you said at the top of the show, we don't many women understand those products. We don't know how they work. We don't know exactly which ones are right for our specific needs. And so it's there's a little bit of a gap that needs to be closed.
Yeah. And with that, there's the understanding that women, right, half of women might look more to an annuity for that guaranteed income than men at, you know, less than that, probably about thirty-seven percent. Why do you think that is?
I think that women are much more likely to be satisfied once we know that we've got a tool that's going to do what we want it to do. We don't necessarily know, I am going to get a new phone because I've got an iPhone eleven and it's got a crack in the screen and it's, you know, the battery is on its last legs. I'm going to get a sixteen. I'm not going to go and get the seventeen with the skinny little everything and the three little cameras. I'm going to get the phone that does what I need it to do.
And I'm not going to feel at all bad about that. Right? I'm actually going to feel just fine about that and I'm going to keep that phone for as long as it will serve me.
I think that many men would go for the seventeen.
It's a little bit of a difference between a big shiny object and a solution that we know is going to work every single time.
The important thing is that women have more financial power in the household than we've ever had before, and so we're driving a lot of these decisions. I mean, I know that the women in my community, very interestingly, about ninety percent of them say that they either make the decisions with a partner or on their own, but eighty percent would prefer to just do it themselves.
Right? Because we know what serves us. And so not talking to women and not making an effort to include women in the conversation is really not good for the advisory industry.
Absolutely. And, you know, as you've talked about it there this is complex. It is. This is not an easy solution. And so, I wonder about what are the top things that you would recommend to women, probably in Gen X as you were describing, as they think about finding a financial professional?
I think that you search for a financial professional the same way that you search for a good doctor, honestly. And I think that the bar is a very, very similar bar. So, when I'm searching, whether it's for a doctor or a financial professional, I am gathering a shortlist, from friends and colleagues who I know are in similar financial situations to me. There are financial advisors out there who specify in, particular 401k plans that deal with certain employers. If, you know, if I worked for that employer, I would want one of those advisors. But barring that, I want somebody who handles people like me so that I'm not the first person like that. Then I want to know where this person comes from, what are their credentials, how long have they been in the industry.
I want to sit down and I want to have a face-to-face conversation with them, whether I do it on Zoom or whether I do it in the next chair, about what they would recommend for somebody like me and what sort of risks they believe I should feel comfortable taking.
I want during that conversation for that person to be listening more than they're talking.
I think, you know, this is about the client's life and about the client's dreams and about the client's goals. And so if the advisor's doing all the talking and not asking, then that isn't going to, it isn't going to be a balanced relationship.
And then I'm going to do a gut check. Right? There are a lot of qualified advisers out there. They are not all the right adviser for me. And if something in my gut is telling me that this is the wrong doctor or this is the wrong adviser, I'm going to find somebody else because that's an important voice to listen to.
Yeah. That's fabulous. I have appreciated you sharing your experience and advice with us today. I think it's so incredibly important for us to continue to share these insights and stories so that women can be more empowered to achieve that retirement security that we know everyone is searching for. Jean, thank you again for sharing your time with us today. Really appreciate your experience and expertise.
Thanks for having me. Absolutely.
Now we know it's clear that women represent both a powerful financial force and a client base that needs more tailored guidance. You know, for financial professionals listening, the message is really simple.
The future client is increasingly female and meeting her needs, whether it's for protection, income strategies, and simply just better communication will really be essential for long term success.
And for those female listeners, you know, go out, as Jean said, talk to your friends, your colleagues, and others in the community to find a few professionals that you can interview and have a conversation with to ensure that they'll meet your needs.
Thanks for listening today.
To hear future podcasts, subscribe at LIMRA.com/podcast.
