Empowering Women: Navigating Unique Retirement Planning Challenges
About the Guest(s):
Amy Irvine is the CEO and founder of Rooted Planning Group, a financial planning firm focused on providing personalized and strategic financial advice. With extensive experience in the financial sector, Amy has become a respected voice on issues related to retirement planning, particularly concerning the unique challenges faced by women. Her work emphasizes the importance of integrating financial goals with a client's holistic life vision.
Episode Summary:
In this episode of "Money Roots," Amy Irvine delves into the intricacies of retirement planning with a particular focus on women's unique financial challenges and opportunities. Speaking from her experience delivering a session at a women's conference, Amy addresses the disparities in planning for retirement between men and women, spotlighting the importance of early preparation and proactive strategy adjustment. With a compelling call for envisioning a financially free future, Amy intertwines practical advice with empowering insights.
Throughout the episode, key topics include the gender pay gap's impact on savings, the significance of career breaks for caregiving, and the influence of longer life expectancies on financial planning for women. Discussions emphasize the importance of developing a comprehensive approach tailored to each stage of life—from young professionals to retirees and single women. Through data-driven observations, listeners are encouraged to rethink their approach to retirement by focusing on satisfaction, adaptability, and informed decision-making in financial strategies to ensure lasting security during retirement.
Key Takeaways:
- Early engagement in retirement planning can alleviate uncertainty and ensure a financially secure future for women, who face unique career and financial challenges.
- Women should be acutely aware of the gender pay and savings gap that can compound over a lifetime, affecting their long-term financial health and retirement readiness.
- Utilizing a "Wheel of Life" to assess personal satisfaction across multiple life domains can guide effective planning towards a balanced and fulfilling retirement.
- Different stages of life, such as young professionals, established families, and retirees, demand tailored financial strategies and targeted goals to maximize benefits and safeguard savings.
- Women need to actively advocate for themselves in the workplace, recognizing and addressing factors like menopause and caregiving that may influence career progression and financial stability.
Notable Quotes:
- "I've learned that making a living is not the same as making a life." – Amy Irvine
- "Retirement is one of the longest vacations of your life, so it's critical to address it early."
- "Women often face career breaks for caregiving, impacting both earnings and retirement savings."
- "Sit with the word retirement and think about what emotions it brings—excitement, restlessness, fear—all can be present together."
- "Women are great savers but often don't know what to do with the money. Investing wisely is key."
Resources:
- Rooted Planning Group: Rooted Planning Group
- Maya Angelou's quote on making a living versus making a life.
- The Wheel of Life tool from Money Quotient for personal satisfaction assessment.
To gain in-depth insight into women's retirement planning and to learn practical strategies for various stages of financial life, tune in to this episode of "Money Roots." Stay updated with our podcast series for more enriching financial guidance and discussions.
Links referenced in this episode:
Companies mentioned in this episode:
- Rooted Planning Group
- Corning Community College
- Money Quotient
Transcript
Foreign.
Speaker A:This is Money Roots, the podcast where Amy Irvine and her team keep money conversations real, relatable and rooted in your goals.
Speaker A:Let's grow together.
Speaker A:Hello Money Root podcast listeners.
Speaker A:Amy Irvine here, CEO and founder of Rooted Planning Group.
Speaker A:I recently did a session up at Corning Community College, which is local college here in, in upstate New York.
Speaker A:And the topic that I did the session on was for a women's conference.
Speaker A:And so it was on women planning for retirement, strategies for financial security and wellbeing.
Speaker A:So this was the topic.
Speaker A:Now, one of the questions that, you know, people will sometimes ask me, like, why is it different for women than it would be for men?
Speaker A:Well, women often face unique challenges that men don't, unfortunately, or fortunately, I should say don't have those same challenges.
Speaker A:Uh, and so I, I thought, you know, as I was processing how the session went, I thought, you know, this is a really good topic to actually bring up on the podcast.
Speaker A:So I'm going to start with some reasons why anybody should be thinking of retirement.
Speaker A:Many people find retirement planning overwhelming and often paralyzing due to the chaos and uncertainty involved.
Speaker A:There's, you know, retirement is one of the longest vacations of your life.
Speaker A:We work many, many years and then all of a sud, we're just done.
Speaker A:Like, I mean, some people go on to do part time jobs or consult or something like that, but it's still a changing career.
Speaker A:And often retirement seems like a distant concern, but, you know, it's something that we need to be planning for and not necessarily an immediate factor.
Speaker A:However, it is critical to address early.
Speaker A:And as Maya Angelou wisely said, I've learned that making a living is not the same as making a life.
Speaker A:So we have to take that into consideration when we're thinking about retirement.
Speaker A:Now consider what your current life would look like if money wasn't a barrier.
Speaker A:It's a question I ask almost every client.
Speaker A:What would your money look like?
Speaker A:What would your life look like if money wasn't a barrier?
Speaker A:Now, how would that look differently in retirement?
Speaker A:Is there any difference?
Speaker A:And so as we explored that with some of our attendees, we talked about things like addressing uncertainty earlier.
Speaker A:So like, starting retirement planning early helps mitigate the chaos and uncertainty.
Speaker A:But we talk about what roadblocks can get in the way of retirement.
Speaker A:So things like disability, losing a significant other, job changes, you know, so planning for those uncertainties early so that we can make sure that those roadblocks aren't permanent roadblocks.
Speaker A:And then shifting the perspective on retirement, viewing retirement as an immediate concern, rather a Distant one is quite honestly critical for effective planning.
Speaker A:We also look at balancing that life, living and that life.
Speaker A:As Maya Angelou said, you know, I've learned that making a living is not the same as making a life.
Speaker A:We can't just plan for retirement.
Speaker A:We have to distinguish between making a living and making a life and how to get to retirement.
Speaker A:So that we're not always saying, I'll do that in retirement, I'll do that in retirement.
Speaker A:Because none of us are given tomorrow, right?
Speaker A:So we have to do that balance and then we have to envision a financially free future.
Speaker A:Imagine your current life without any financial barriers and how it can shape your retirement goals.
Speaker A:And I know that seems grandiose, but I often the things that we would change are really quite small in nature.
Speaker A:So it's a matter of making sure that we understand what we really want our life to look like and then starting to ask how can we achieve that?
Speaker A:Often retirement when the word retirement.
Speaker A:Well, actually, let me take a pause.
Speaker A:So if you're listening to this podcast, after I say this, take a moment, pause the podcast and just sit with the word retirement for a moment.
Speaker A:Maybe journal about it just a little bit.
Speaker A:But what does does the word retirement invoke in you?
Speaker A:It may evoke different feelings all within seconds of each other.
Speaker A:Could be excitement, restlessness, a new beginning, an end, elation, fear.
Speaker A:All of those could be felt within the very, very same moment of each other.
Speaker A:So, you know, sit with that word and think about what does the emotion bring?
Speaker A:Now in the actual session, I had people fill out what we call our wheel of life.
Speaker A:What if we were to reframe the traditional approach and thinking, but instead focusing focus on what brings you satisfaction and that's going to change throughout the course of your life.
Speaker A:So we have a tool through a program called Money Quotient and you rank various areas of your life from one to ten on a wheel.
Speaker A:So it's on the circular wheel and then you draw lines to connect the dots.
Speaker A:We'll provide the link and the money in the show notes for anybody that wants to do this for themselves.
Speaker A:But the areas are family, finance, work, community, home, inter growth, learning, leisure and health.
Speaker A:On a scale of 0 to 10, where would you rank your level of satisfaction?
Speaker A:This is not something we ask you to put a lot of thought into.
Speaker A:It's boom, boom, boom, boom, boom.
Speaker A:Rate zero to 10.
Speaker A:And then when you connect the dots, you can see how do you have any flat spots in your wheel?
Speaker A:Is there anything that stood out to you?
Speaker A:Is there anything That's a priority that you'd really like to address.
Speaker A:And the areas that are high right now, what makes them high, what's going well, what will keep them going well?
Speaker A:And the areas that are low right now, what changes could be made?
Speaker A:Or do we need to make changes?
Speaker A:Because sometimes levels of satisfaction can be low because they just don't exist.
Speaker A:But in reality, we've rated them low because we think think we should be doing more.
Speaker A:I'll give you an example.
Speaker A:We had a client who rated Community like one or two.
Speaker A:And I said to her, after we talked about all the really good things that were going well in her life, I said, why is this low?
Speaker A:And she said, well, I should be doing more.
Speaker A:And, you know, if you've listened to this podcast for very long, whenever I hear that word should, I'm like, we don't should on ourselves.
Speaker A:Why do you think it should be more?
Speaker A:Because you want to do more or because you think there's pressure for you to do more?
Speaker A:And she said, well, I look at what my friends are doing, and they're doing so much more in the community.
Speaker A:And so I reframed the question and said, do you want to do more?
Speaker A:And she said, I'm doing what I want to do.
Speaker A:I said, great, so are you really dissatisfied with your community activity?
Speaker A:And she looked at me and smiled and said, no.
Speaker A:And so it's just.
Speaker A:It's thinking about that.
Speaker A:She was actually very happy with the one organization that she provided community service to.
Speaker A:It was perfect for her.
Speaker A:It totally fit her values.
Speaker A:It's just that she saw what her friends were doing and she thought she should do more.
Speaker A:And so we don't should on ourselves ever, right?
Speaker A:So we don't should this, should that.
Speaker A:And when I said to her, you know, are they overwhelmed in their lives?
Speaker A:Are they too busy?
Speaker A:Are they doing more than they should?
Speaker A:And you're doing just the right amount.
Speaker A:So just remember this is your level of satisfaction and not what you think your level of satisfaction or think you should be doing.
Speaker A:And that drives your level of satisfaction.
Speaker A:We talked about things like some of the challenges within retirement for women and understanding them.
Speaker A:So of course it happens for both.
Speaker A:But unfortunately, with women, the challenges include gender disparity and savings, impact of career breaks and, honestly, longer life expectancies.
Speaker A:So when we look at the seven distinct life cycles of women, there basically are what we consider seven distinct life cycles.
Speaker A:Things like marriage, divorce, remarriage, motherhood, empty nest and child, possibly childlessness, family planning, career changes, menopause, and women Widowhood.
Speaker A:Each of these stages brings unique challenges and opportunities influencing personal growth, relationships and overall well being.
Speaker A:Which is why we keep going back to that wheel of satisfaction.
Speaker A:Understanding these cycles can help improve and better support the resources tailored to, you know, each person and woman's needs.
Speaker A:But here's the thing I mentioned earlier.
Speaker A:There is these unique things like a gender pay gap in the US when young women first start their career.
Speaker A:By young women, I'm looking at ages 25 to 30.
Speaker A:They may earn close to or even slightly more than men in some especially metropolitan areas.
Speaker A:By the time they get to 35 to 44 and 45 to 54, they earn 83% of what a male does and 81% respectively of what a male does.
Speaker A:So as they get older, the pay gender gap increases.
Speaker A:And then for women ages 55 to 64, the earnings drop to 79.332% of men's.
Speaker A:So right at the end of their career, their earnings are reducing.
Speaker A:Now this is the average.
Speaker A:So there are certainly disparities among people of color even greater than white women.
Speaker A:And so that's something that we have to take into consider with consideration when we're planning that because there is a pay gap, pay gender gap, gender pay gap, Excuse me.
Speaker A:There's also a saving gap because if we're deferring 10% of our salary, it's 10% of 80% of what would be amount salary, not 10% of 100%.
Speaker A:So it's not just the impact of the pay gap, it's the impact of the savings gap.
Speaker A:That's a big deal.
Speaker A:We also, as women as a gender, have a tendency to have things like career Blakes breaks for caregiving.
Speaker A:It could be caregiving for children, it could be caregiving for parents.
Speaker A:There is what we call the menopause factor.
Speaker A:Yep, I'm talking about menopause.
Speaker A:Think about what happens during that time of your life.
Speaker A:It's also true when you're going through having babies because hormones are swinging, mood swings, anxiety, depression, brain fog, insomnia, decreased self esteem can sometimes potentially relate to what is viewed as job performance.
Speaker A:If you're all of a sudden very moody, if you're all of a sudden anxious, if you have depression, people can perceive that as a change in behavior.
Speaker A:And a change in job performance doesn't necessarily mean that you are doing a worse job.
Speaker A:It just means that it's a perception.
Speaker A:Those are important things that cause some of the pay gap to actually start to happen.
Speaker A:And we need to stay on top of that and be aware of it so that we can plan accordingly and advocate for ourselves.
Speaker A:You've heard many, many times women live longer than men.
Speaker A:That is a statistical number, right?
Speaker A:So we need to plan for longer.
Speaker A:And because we tend to live longer than men, we are the ones that need greater personal care and have greater health care costs or caregiving costs when, because we're the survivors, right?
Speaker A:So often we're taking care of our significant other.
Speaker A:Maybe that delays bringing somebody in to help you, delays going into a nursing home.
Speaker A:But then when we need care, our costs are higher because there's nobody there to do that for us.
Speaker A:So those are important things that should be taken into consideration when we're planning for women in retirement.
Speaker A:We need to have really clear goals and time horizons when we're looking at retirement.
Speaker A:You know, if somebody wants to continue working because, because they love their job, great.
Speaker A:But we have planned for a certain age.
Speaker A:Certain companies allow you to retire unreduced with unreduced benefits at age 55, while others have it at 62.
Speaker A:And some people want to work right up until they're eligible for Social Security.
Speaker A:It just gives them more security.
Speaker A:So.
Speaker A:And some people just don't like the companies that they're working for, the jobs that they're in and they want to get out as soon as possible.
Speaker A:But understanding whether or not their cash flow will support that and their savings will support support that is really important.
Speaker A:And maybe they'd be willing to do a part time job on top of that.
Speaker A:But we need to look at things like investing too.
Speaker A:Women have a tendency to put off.
Speaker A:They, they are great savers, they're fantastic savers, but then they don't know what to do with the money.
Speaker A:And so making sure that the money actually gets invested and not too conservatively invested.
Speaker A:Again, it's just a statistic that women need to be aware of and aware of what investment options that they have available.
Speaker A:I mentioned briefly earlier, we need to be aware of risk management and risk mitigation strategies.
Speaker A:Looking at things like life insurance and disability insurance and even, you know, some caregiving insurance.
Speaker A:Potentially those are risk mitigations, but also making sure that things like your homeowners and your auto and your personal liability policies are sufficient and not putting your retirement income at risk in any way, shape or form.
Speaker A:And then, you know, running some strategies behind Social Security planning and distribution is pretty important.
Speaker A:Now when it comes to various types of, I guess, groups that we work with and thinking about what needs to be done at different ages.
Speaker A:I have a couple categories that I Sort of break down things into.
Speaker A:One is young professionals.
Speaker A:So young professionals, they're early in their careers, often in their 20s and 30s.
Speaker A:A lot of times they're single, maybe in a relationship and you know, may, may have one child or possibly no children.
Speaker A:And they're typically focusing on their career advancement and personal development.
Speaker A:Now we focus on the top priority financial goals that we focus on is building an emergency fund, paying off any student loans or other debts that they may have, definitely starting the four 401k retirement savings, Roth IRA if we can, during that period of time and possibly saving for major purchases like a car or home or those things.
Speaker A:That's typically what we're looking at for young professionals.
Speaker A:We're looking at creating a budget to manage these expenses and prioritize savings with the income, establishing that three to six month emergency fund and then looking at the different employer sponsored benefits that are available and you know, even looking at strategies like, you know, debt reduction strategies like the snowball or avalanche method.
Speaker A:That's typically what we're looking at for young professionals when they move into the young families.
Speaker A:Now these are people that are recently married or with young children.
Speaker A:They're trying to balance work life and family and all that sort of stuff.
Speaker A:And there's typically increasing household expenses because you have another little human running around.
Speaker A:There might be an added savings goal of education which could be in a 529 plan or could be in a brokerage.
Speaker A:It depends on your, you know, beliefs around that.
Speaker A:But typically that's something that we add to the list of savings goals.
Speaker A:Maybe they're buying a home for the first time or upgrading their home.
Speaker A:Definitely managing household budgets and expenses and that continuing to have a good retirement savings plan as well as an emergency fund.
Speaker A:So in that age group it's developing a comprehensive family budget.
Speaker A:It's making sure that people understand the different types of buckets they can save into and then finding, you know, good life insurance and disability insurance if the employer doesn't actually offer it or even if they do something outside in case you change employment.
Speaker A:The next phase, if you want to call it that, is established professionals.
Speaker A:So now these are mid careers, significant professional experience, often in their 40s and 50s.
Speaker A:They have higher levels of income and greater financial complexities.
Speaker A:They potentially managing dual income households so there's maybe more resources available.
Speaker A:So now we're looking at optimizing contributions to retirement plans, looking at investment strategies for growth and risk tolerance, implementing as many tax efficient investments and saving strategies as possible, and planning for major expenses such as College tuition and you know, any other expenses that might be coming, coming up in your household.
Speaker A:And then, and then we kind of move into what's called pre retirees.
Speaker A:So pre retirees, these people are nearing retirement age.
Speaker A:They're typical, typically in their 50s, late 50s or early 60s.
Speaker A:Trustees, the focus is on securing financial future and transitioning into retirement.
Speaker A:Now that can be both financial and emotional, by the way.
Speaker A:So we want to make sure there's sufficient income.
Speaker A:We want to protect and preserve accumulated wealth.
Speaker A:So we want to make sure that we've done some planning around health care and caregiving costs.
Speaker A:And then we also want to make sure that we do a check in with the estate planning needs.
Speaker A:I didn't mention that for, for young families, but I should have.
Speaker A:When you have a young family, we need to start thinking about who's your custodian of your child if something should happen to you.
Speaker A:Also having that will healthcare proxy power of attorney.
Speaker A:But pre retirees would be a great time to review some of that information.
Speaker A:Things that we want to start looking at into with great detail is including the Social Security strategies.
Speaker A:If you are lucky enough to have a pension, pension options.
Speaker A:If not, do we annuitize any of your income to give you a pension like, or do we just set up monthly payments out of your retirement accounts?
Speaker A:We review any kind of portfolio changes that may need to take place to reduce risk.
Speaker A:But we also don't want to become too conservative because you are spending a lot of years in retirement.
Speaker A:So we need to make sure that's there.
Speaker A:We need to plan for health care expenses, especially if you're under age 65 and not eligible for Medicare yet, but retiring, then where are you going to get your health insurance?
Speaker A:How much is it going to cost?
Speaker A:And we need to plan for that.
Speaker A:And if, if we're finding any changes that need to happen to your estate plan, then you know, making those changes possibly prior to retirement.
Speaker A:And then the next group would be retirees.
Speaker A:So now you've fully transitioned into a transition phase, you focused on maintaining your standard of living and managing your retirement savings.
Speaker A:We would be looking at developing a withdrawal strategy so that the assets will last.
Speaker A:We're looking at how to make those as tax efficient as possible.
Speaker A:If you're of a certain age, whether it's 73 or 75, then we're going to start talking about what's called required minimum distributions from retirement accounts or qualified charitable distributions from those retirement accounts if you're charitably inclined.
Speaker A:And we need to be thinking about managing those healthcare Costs still, that's something that's really important.
Speaker A:Another category, for lack of a better word or stage, is those that are caregivers.
Speaker A:So these folks are balancing their finances while caring for aging parents or family members with special needs.
Speaker A:They are the ones that may experience career, career interruptions and financial strain because there's gaps in their savings, there's gaps in their salary.
Speaker A:They may need to use some of the money that they've saved to cover their salary.
Speaker A:We want to be thinking about recovering from their retirement savings, protecting their retirement savings.
Speaker A:This is one of the type of individuals that we really want to have a good solid budget that includes possible caregiving expenses, not for you necessarily, but for your loved ones so that you get a break.
Speaker A:We should definitely explore financial assistance and benefits for benefit programs for the person that you're caregiving and to the caregivers.
Speaker A:And we need to really be thinking about how to protect those retirement savings and plan for the future needs if you've got this career gap, because it might not be there as readily for you.
Speaker A:We need to provide resources and support for balancing that work and possibly work and caregiving and family life all together.
Speaker A:So it becomes quite a challenge.
Speaker A:And then one other final category, and it's certainly not the least, the last category is single women.
Speaker A:So these are women that are not married, never married, divorced, widowed.
Speaker A:They're, you know, the primary goal is to maintain independence.
Speaker A:I mean, that's, you know, certainly important.
Speaker A:And then, you know, making sure that we look at things like long term financial security strategies, so advise on investment strategies to build and grow the wealth or at least maintain it.
Speaker A:Plan for healthcare costs, plan for care, and then again, make sure all legal documents are update up to date.
Speaker A:One category of people that are becoming more and more predominant is digital nomads.
Speaker A:Now these tend to be people who work remotely or travel frequently.
Speaker A:They're often freelancers, entrepreneurs or employees with flexible work arrangements.
Speaker A:And things that we need to be thinking about is international banking solutions and currency exchange exchange options.
Speaker A:Developing a global diversified investment portfolio is really critical.
Speaker A:And then we want to provide guidance on tax implications and strategies for possible multiple countries, depending on how long you're going to be in those countries and where your income is going to be earned.
Speaker A:And we definitely want to be thinking about how to provide for health care if you're going to be traveling, especially abroad, and even maybe travel insurance.
Speaker A:So those are just some things that I think are important to be thinking about.
Speaker A:Hopefully this has given you some ideas for yourself to just sort of think about.
Speaker A:For your own situation.
Speaker A:This is by far not anything that is conclusive in nature when we're working with clients to develop a plan to manage cash flow, to explore different options that are available to you.
Speaker A:But they are hopefully some ideas.
Speaker A:Hopefully I've given you some ideas to be thinking about.
Speaker A:You know, really when you think about everything wrapping it all up into a bow, the things you want to be thinking about is what challenges could happen to you, what goals are most important to you, how do you maximize the benefits that are eligible to you, and, and, and what does your fulfilling lifestyle look like?
Speaker A:What is your.
Speaker A:Where are your satisfaction levels?
Speaker A:I hope that you've enjoyed this podcast and that, you know, if you have any questions or suggestions or areas that you'd like, topics that you'd like me to cover, please let me know.
Speaker A:We would love to cover those topics in this particular podcast and we hope that you enjoyed, like I said, this podcast, this particular session and that you got some great ideas that you can implement in your life.
Speaker A:Thank you for tuning in and we look forward to next time.
Speaker A:Thanks for listening to Money Roots.
Speaker A:Until next time, keep your finances grounded and your future growing.
