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Women Face Challenges In Retirement That Men Just Don’t.  Here’s How To Overcome Them. 

Jean Chatzky  |  November 11, 2019

The salary gap and breaks from work plus the fact that we outlive men add up to create a retirement gap you should be focusing on closing right now.

It’s no newsflash that women face obstacles when it comes to retirement that men simply don’t, says Catherine Golladay, President of Schwab Retirement Plan Services.  She should know. She’s responsible for administering 401(k) plans serving more than 1.5 million individuals. In this Q&A, we dig into the stress resulting from the substantial retirement gap women face – and how to close it.

Jean Chatzky: Women are still facing the same obstacles when it comes to retirement that we were a decade ago, aren’t we?

Catherine Golladay:  These aren’t surprises.  Women live longer than men.  On average they’re making less.  Women are more likely to serve as caregivers for children and parents.  Those are factors that play into how women are saving for retirement – and how they’re doing.

JC: For you, it’s personal.

CG: Yes, I’m in that situation now, helping to take care of my elderly parents.  Of course, you’re happy to do it in that situation. But I can’t help but remember a piece of advice my mom gave me as a teenager.  She said: ‘I hope, Catherine, you’re blessed with long and loving relationships, and what I also hope for you is that you can develop a self-reliance when it comes to your relationship with money.’ My mother was an RN.  She came from Ireland. She had the perspective of being able to see how important it was for women to be able to take care of themselves.

JC: Beyond accumulating less money for retirement, what are the ramifications of these differences between men and women?

CG: Stress. We did a recent survey of 401(k) participants.  What really came to the forefront was that women are experiencing a higher level of stress when it comes to retirement planning – more than 40% said it represents a significant amount of stress for them.  They also have a lower level of confidence – over half of women said they’re not sure what investments they should be choosing. Finally, the study showed that it seems that women have a different relationship to financial planning than men. 

JC: What do you mean by that?

CG:  Most women see themselves as savers rather than investors.  They don’t have that investor mindset that’s so important as you’re preparing for retirement.

JC: Can you be a little more specific? What are the hallmarks of having an investor mindset?

CG: It’s a higher level of engagement with your investments.  Over half the women we surveyed had never changed their 401(k) investment choices – that’s twice the number of men. One factor driving that is auto-enrollment, where employees are placed in the plan automatically, and their employer chooses their initial investments and their contribution rate. 

JC: That’s a problem I’ve seen before.  All too often, employees are automatically enrolled at a 3% contribution and don’t ever think to bump it up.

CG: Yes – kudos to employers who are automatically enrolling employees into their 401(k)s.  However, you can’t have so much trust that your employer has taken care of this for you that you start to believe you can set it and forget it.  Some of that is playing out for women in particular. They don’t see that they’re participating in the market. 

JC: So, what’s the solution? How do you lower the stress and increase our feelings of confidence simultaneously?

CG: In many families, a woman is the one willing to pull over and ask for directions.  We need to use that to our advantage. If you haven’t asked for help or you don’t have a plan, that leads to a higher level of anxiety. The majority of 401(k)s these days offer professional advice through a managed account or online tools and resources.  (If you’re someone who likes to do it yourself, you can by accessing the tools.) 

JC:  When do you need a financial advisor?

CG: Again, I’ll use my life as an example. I have two daughters, in their later 20s.  And as they were coming into their adult lives, we sat down and created a simple plan.  We focused on their 401(k) plans, talked about budgeting and how much they should be saving – our rule of thumb was 10% to 15%.  In my mind, that wasn’t about having a financial advisor, but about getting some financial advice.

JC: That’s a really important distinction.  So, when would you – when will you – tell them to step it up?

CG: You go from advice to advisor as you cross through life’s milestones. As people experience life events – getting married, having children, heading toward retirement, caregiving – or as they age in general, they can continue to build out a holistic plan.  That’s where the advice comes in different flavors.  

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