Women tend to have different strengths and priorities than men that produce unique retirement challenges. Financial professionals who learn about these factors and build better communication skills can help more women build effective retirement strategies — and keep them as clients.
Amanda Carstens Steward, Senior Vice President of Marketing & Communications for Athene, has made it a mission to help financial professionals understand women’s strengths, priorities and challenges. She is also passionate about helping women feel heard and empowered.
The daughter of a supportive mother who ran the household finances and a father who was a banker, Steward had additional influential role models who demonstrated the importance of money management and were examples of how women could help ensure a more rewarding, financially secure future in their sixties and beyond.
One was her maternal grandmother, who remained working well after 65. “She continued her training and became an administrator, even after my grandfather retired. The additional income helped and she liked having that sense of purpose.” Another was a close friend and mentor at Athene, whose husband had retired from the military. “Again, she enjoyed working and it gave her that same sense of purpose. I think in both cases, it set those women up for long-term financial success once they did decide to retire.”
Setting women up for retirement success does have challenges, however. Steward, who has been in the financial services industry for most of her career, shared some big-picture planning realities for women. She also provided insight on how financial professionals can improve communication and help women feel empowered.
Women’s retirement planning realities
In spite of overall life-expectancy decreases as a result of the COVID-19 pandemic, life expectancy at birth for females is still nearly six years longer than for males. For women turning 65, they can expect to live, on average, to approximately age 84.7, nearly three years longer than men turning 65 can expect. As a result, women not only need to cover daily living expenses for longer, but often face higher healthcare costs, Steward notes.
Because of their longevity advantage, women will need money for a longer time. “A financial professional should help women build a retirement paycheck and consider all potential sources: savings, 401(k) and IRA distributions, pensions, and how annuities might add security and stability to the plan to optimize income,” Steward says. Questions financial professionals can help women consider include: Should I wait to take Social Security? Can I use an annuity to help fill the income gap meanwhile? How much money will I need to cover my expenses? How will I cover long-term care expenses?
In fact, Social Security plays a very important role in overall retirement income, especially for women. Financial professionals can add significant value by educating clients, particularly women, on their specific and unique planning options.
Another impact on retirement is the major role many women play as caregivers throughout their lives. The time they take away from the workforce to care for children and elderly parents — sometimes simultaneously — can result in lost pay and advancement opportunities.
It’s extremely important for financial professionals to address the impact unpaid caregiving or time off may have on retirement savings, especially because women face a wage gap in the workplace as well, Steward says. Thoughtful financial professionals should build strategies that take these kinds of issues into account, she adds.
Building retirement confidence among women is another way financial professionals can play a crucial role in ensuring their futures, Steward says. Compared with women, more men say they have a retirement strategy and feel “very confident” they can retire comfortably. In particular, unmarried women workers and retirees have lower confidence than their married counterparts, says a recent retirement confidence survey. Plus, one-third of women overall said they don’t know where to go for good retirement planning advice.
Although women are less likely than men to have a retirement strategy — whether written or in their heads — they are much more likely to guess how much they would need to create a secure retirement, says Steward, quoting survey findings.
“Because many have caregiving experience and manage family budgets, they have an intuitive understanding of the financial needs and those realities. But because of all the things they’re managing, they often don’t take the time to develop that planning muscle. Many women are so busy planning in the present that they don’t always apply those same planning skills to their own future,” Steward says.
Financial professionals can help build women’s retirement confidence by pointing out their skills with managing money in the present. “Financial professionals can highlight what women do well and how to use those skills to help with long-term planning,” Steward says.
Financial professionals who learn how to better communicate with women have the opportunity to greatly increase their business. Some recent research from the Federal Reserve shows women are less comfortable making investment decisions than men, suggesting women may be more open to advice from financial professionals. Among non-retirees with a self-directed retirement account, 64% of men with a bachelor’s degree were mostly or very comfortable making investment decisions, compared with only 33% of women with a bachelor’s degree. That percentage of women was even less than the 37% of men with a high school diploma who felt comfortable.
“With women, it’s getting them to share their goals and their dreams, helping them to see what they want retirement to be — the bigger picture,” Steward says. “They want to start with visualizing their future self and look at ways they can make those dreams come true.”
Whether married or single, financial professionals need to spend time getting to know women individually — what their risk tolerance is, what they value, what their priorities are — and then build a plan that fits, Steward says.
“Studies show that even when we go to get our hair cut, we want to get it cut by somebody who ‘gets’ us, who understands our life. People want to work with somebody who understand their goals with whom they feel comfortable building a plan — someone they can trust,” Steward says.
In fact, there are steps you can take to better engage women clients and build a relationship based on trust and confidence.
Financial professionals, who are still mostly men, may need to adjust their communication style to help women feel comfortable talking about retirement planning. “Again, I think starting with the end in mind, then backing into the strategies that can help women achieve their goals, can be a good approach,” says Steward.
Top 5 Questions to Ask Women
As a seasoned communicator, Steward suggests these five questions to jumpstart the retirement planning conversation and build lasting relationships. The answers can help financial professionals build strategies that are responsive and create trust. Most important, the questions will help women feel their financial professional “get” them:
1. Retirement means different things to different people. So, what does it mean to you as an individual?
2. As you think about what you’d like to do in retirement, what expenses come to mind? What sorts of things would you like to spend your money on?
3. Do you feel confident you’re financially prepared for your second act, one that may last 20 or 30 years? Do you have any particular concerns?
4. When you think of your retirement savings and expenses, what would be most important for us to consider in creating your retirement paycheck?
5. How important it is to have sources of guaranteed income in your retirement plan?
Looking to the Future
There’s no doubt that many more women could benefit from retirement planning than currently receive it. How can the financial services industry evolve to service this need?
“The obvious thing is to hire more women, considering only 25% to 30% of financial professionals are women,” Steward says. “We need to encourage more women to join the financial services industry.”
But it’s not only that, Steward adds. “We need to understand a woman’s approach to planning and how that may be different. We need to take the time to dig deeper and ask those questions to really understand what her individual goals are, what she’s trying to achieve, and then talk through the strategies that can help her get there.”