(Hingham, MA) – Love isn’t all you need when it comes to finances and planning for the happily-ever-after of retirement. Less than 40 percent of couples share a common vision of retirement, according to retirement and savings trends research firm Hearts & Wallets.
Hearts & Wallets research[1] finds only 38 percent of couples engage in retirement planning together. Yet, one in five worry their spouse or partner may not be able to manage finance alone. Complicating matters is that women tend to be more anxious in general about financial matters than men, according to the Hearts & Wallets Insight Module, Understanding Women Investors: Breadwinners, Homemakers, Mothers and More, the latest report from Hearts & Wallets’ 2012/2013 Investor Quantitative Panel. This annual survey of more than 5,400 U.S. households tracks specific segments and product trends and is both a proprietary database and series of syndicated reports.
“Many couples put off discussing finances, not just as they plan for retirement, but at other times throughout their life together,” said Chris Brown, Hearts & Wallets partner. “Finances are an extremely difficult subject, but one that is critically important to share an understanding of and common goal for, especially as couples age and income streams become more restricted.”
Instead of ignoring the elephant in the room, Hearts & Wallets recommends couples consider trust services as a viable solution to plan ahead for the financial income required as couples age and the day when retirement may be come inevitable. Family management of finances may be another option, depending on the competency and availability of family members.
A critical challenge in today’s climate of low interest rates is how to generate enough income to comfortably live off savings if both partners retire.
Age Gap or Communication Gap?
An age gap, often cited by the financial services industry as a challenge to financial planning for couples, is not viewed as much of a problem by the couples themselves.
“Couples seek financial services advice experiences that help both partners get on the same page, or at least help them determine where their differences lie,” Laura Varas, Hearts & Wallets partner, said. “They both want to be capable of managing finances should something happen to the other partner.”
Women’s Woes with Finances
Many men in the Hearts & Wallets focus groups felt their wives were uncomfortable with finance and might need support. The men had a palpable sense of frustration that they could not engage their wives to be more involved in financial matters.
In Hearts & Wallets’ quantitative survey, 38 percent of women express either high or moderate anxiety as compared to 29 percent of men. The highest anxiety is among women with children under 18 at 40 percent. Women are also more concerned about things both within and out of their control and more risk adverse and less experienced with investing than men.
Women, and mothers and older women in particular, are more concerned than men about every issue, with the most concern around outliving their money, reduction or elimination of pension benefits, the futures of Social Security and healthcare, and setting aside sufficient funds for retirement.
More than half of all women are confused by “all the investment information out there.” More than 60 percent of middle-aged women, or Accumulators, both breadwinners and non-breadwinners, confess to being confused by the plethora of investment information. Mothers with dependent children under 18 are close behind at 59 percent. The least confused are widows age 55 and older, perhaps because they have been forced to assume primary responsibility for finances.
Where Women Go for Financial Help
Older women, both married and widowed, are more likely to use a financial services adviser as an advice source and as a primary source of advice. Three-quarters of married non-breadwinners 70 percent of widows age 55 and older consult a financial adviser. Thirty-five percent and 26 percent of those segments say their adviser is their primary source of advice. In comparison, only 58 percent of middle-aged breadwinners and 59 percent of women with children under 18 consult financial advisers. Only 16 percent and 18 percent of those segments rely on advisers for primary advice.
Non-working women of all ages and widows 55 and older rank plain talk as their first priority when it comes to financial advice. Middle-aged non-breadwinners also value fee clarity in addition to a provider who explains things in understandable terms. Price was the key attribute for middle-aged breadwinners and mothers who named low fees as critically important in a financial provider.
Perhaps to avoid fees, younger women are looking elsewhere for financial insights. For example, 18 percent of women with children under 18, 14 percent of middle-aged women breadwinners and 13 percent of middle-aged women non-breadwinners use social media to get information about finance and investing. Only two percent of women age 55 and older, both married and widowed, consult such sources.
It is important to recognize that women as a group is a very diverse segment with many aspects, ranging from younger women either working or non-working to older women who are planning to retire and do not work and are married or those who are widowed or unmarried. Insights on the distinct segments of women and their varying financial challenges and needs can be found in the Hearts & Wallets Insight Module, Understanding Women Investors: Breadwinners, Homemakers, Mothers and More.
[1] Hearts & Wallets 2012/2013 Quant Panel, State of Retirement funding & Household Finances in 2012. Hearts & Wallets 2012 Explore Pre/Post-Retiree 2012. Hearts & Wallets 2012/2013 Quant Panel, Understanding Women Investors: Breadwinners, Homemakers, Mothers and More.
For complete data on this study or the firm’s other research, contact Hearts & Wallets.
