This article is reprinted by permission from NextAvenue.org.
This caught my eye: More than twice as many middle-income U.S. boomer women than men said they’ve been able to save more for retirement than expected during COVID-19.
That’s new survey data from CNO Financial Group, which sells health and life insurance and retirement products. Its survey captured insights from over 2,500 boomers (aged 57-75) with an annual household income of $30,000-$100,000 and less than $1 million in investible assets.
According to the report, 61% of boomer women socked away more than expected in retirement accounts vs. 26% of boomer men. Meantime, 62% of women said COVID-19 made them realize they need more money to live comfortably in retirement, compared to 34% of men.
“As a ‘middle-aged’ female, I believe COVID has set my retirement age back at least three to five years due to my fear of uncertainty of many things,” said Lisa Parsiola, owner of the Brighton Group, an interior design firm in Berwick, La. “I am worried about future additional unexpected health care costs and uncertainty in the global economy.”
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How boomer women are feeling about money
Parsiola is fortunate that during COVID-19 she has been able to continue to contribute to her retirement accounts, while increasing her cash reserves.
“The old adage ‘I would rather be safe than sorry!’ couldn’t be more true during this time,” Parsiola said. “It was easier to save during COVID because I didn’t spend on travel, dry cleaning and going out, knowing that my income would be hit.” But her income dropped about 32% in 2020 because some potential customers cut luxury expenditures like her design services and products.
Another new study called “2021 Women, Money and Power,” shows boomer women generally feel like “they are in a good place financially, with 76% indicating that they feel financially secure,” said Aimee Johnson, Allianz’s vice president of Advanced Markets.
At the same time, 51% of the women Allianz surveyed say they are paying a lot more attention to what they’re saving and spending due to the pandemic.
To learn more about recent retirement-saving behavior, what’s causing the gender split and whether that’s likely to continue and why, I reached out to several experts.
First up, CNO Consumer Division President Scott Goldberg, who talked about his company’s survey findings.
“While most people have steady savings and retirement goals, a portion of respondents were able to exceed those goals,” he said. “This could mean that their expected amount was lower due to other financial obligations brought on by the pandemic or that they were hoping to save the same but were still able to exceed that.”
Rising caregiving costs for some
That makes sense to me. The key word is expected.
I think the boomer women surveyed saved more than anticipated due to the initial shock of COVID-19 and fears of a job loss or an uptick in their caregiving costs and responsibilities. Then too, I’ve found in reporting over the years that women of all ages tend to be more pessimistic than men about finances.
Personally, I saw an increase in my own caregiving expenditures when my 91-year-old mom moved in with my husband Cliff and me for much of 2020. To be frank, I thought I might need to trim back retirement savings as a result. Fortunately, I didn’t.
One finding from the Allianz survey that was an unpleasant surprise to me: The number of boomer women who say they have primary responsibility for making long-term financial decisions, such as making a financial plan and handling investment decisions, went down from 37% in 2019 to 31% in 2021.
This news bothered Johnson, too.
“That the number of women who are in, and approaching, retirement are taking a more passive role in their finances is concerning,” Johnson said. “I would encourage women to do the opposite of that as they approach such an important part of their lives. This is a critical time to be engaged, informed and taking charge of their finances.”
Catherine Collinson, CEO and president of the nonprofit Transamerica Institute and Transamerica Center for Retirement Studies (and a Next Avenue Influencer in Aging), told me that her firm’s most recent survey, not yet published, also found that boomer women are generally less confident than men about their ability to retire comfortably.
“Women age 50+ were more likely than men in the same age group to say they reduced their day-to-day expenses during the pandemic,” Collinson said.
But, she added, “early indicators are that the pandemic has prompted both men and women to engage in their finances and pore over their financial situation to a degree that they may not have previously.”
Shaken by the pandemic
Maddy Dychtwald, author and co-founder of the Age Wave think tank and consulting firm, noted that a June 2021 study by her firm and the financial services company Edward Jones found that 75% of preretiree women surveyed said the pandemic caused them to pay more attention to their long-term finances. Just 65% of preretiree men felt that way.
“My guess is that boomer men were more on track with their retirement savings prior to the pandemic, while boomer women were more likely to be shaken by the pandemic which caused them to focus more on retirement savings,” said Dychtwald.
And, she added: “Preretiree women may be more compelled to save and prepare for retirement now because their retirement savings confidence is at an all-time low.”
Finally, Michelle Connell, owner of Dallas-Fort Worth-based Portia Capital Management, doled out three pieces of advice she’d give boomer women regarding saving for retirement: “Put more money in when you can, don’t hold a lot of cash and invest in stocks or a mutual fund that invests in equities in order to take more risk, but have the upside of higher returns over time.”
Connell is adamant about boomer women needing to change their typical safety-first mindset about investing.
“Women are really good about understanding downside risk,” she said. “We know we don’t want to lose (money), so we don’t…Women need to take more risk and balance it out if they are going to finance a life expectancy nearing 90 and the potential for rising inflation.”
Data from LT Trust backs up that mindset concerning Connell. During the pandemic, according to that study, 78% of boomer men increased their retirement portfolio of stocks while only 51% of women did.
When I asked Connell the best way to build this investment risk muscle, she tossed out a name I hadn’t heard in a while — Peter Lynch. He’s the famed manager of the Fidelity Magellan Fund between 1977 and 1990 and author of the bestselling books, “One Up on Wall Street” and “Beating the Street.”
Lynch’s mantra: invest in what you know. Some of his best stock buys came from wandering through stores and asking family and friends about products and services they owned and used.
Connell recommends that same advice. “Stick with investing in things you know, what you do or like,” she said. “Just pick out a few stocks or a basket of stocks in a mutual fund or exchange-traded fund. And do not look at it every day.”
Kerry Hannon is the author of “Great Pajama Jobs: Your Complete Guide to Working From Home.” She has covered personal finance, retirement and careers for the New York Times, Forbes, Money, U.S. News & World Report and USA Today, among others. She is the author of more than a dozen books. Her website is kerryhannon.com. Follow her on Twitter @kerryhannon.
This article is reprinted by permission from NextAvenue.org, (C) 2021 Twin Cities Public Television, Inc. All rights reserved.
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