Every year at this time, I look forward to celebrating International Women’s Day. For me, every day is an opportunity to honor and support women: I’ve built my life and practice as a Certified Financial Planner around helping women and their families live the lives they want.
I meet with clients at all stages of life and wealth-building, but I often work with women in their 50s and 60s as they transition to retirement. We like to focus on the positives that can come with this phase—starting a business or encore career, going to Disney World with the grandkids, or freeing up time to volunteer—but we also have to recognize and plan for the pitfalls that can trip them up.
With that in mind, here are my tips for avoiding some common financial land mines as you move through your 50s, 60s and beyond.
Mind the savings gap
By 2030, women will control two-thirds of the nation’s wealth—but many are behind when it comes to retirement savings. One analysis found that women have 27% less saved up than men, and according to U.S. Census, about 50% of women aged 55 to 66 have no personal retirement savings at all.
Read:Women’s retirement fortunes could improve with a little more planning
There are many reasons women fall behind: they tend to invest less, are often paid less, and they put others first, taking time out of the workforce to care for children and aging parents. In addition, women’s Social Security benefits are 80% of what men receive, on average, and they have longer lifespans—meaning women are living longer on less.
This is tough to think about, but being aware of the gaps is good motivation to do what you can now to close them. One way is to make money on your money by investing. I often see clients with a case of “paralysis by analysis”—they are so scared to make decisions about their money that they do nothing at all. But cash under a mattress doesn’t appreciate. By working with a financial professional, these clients understand how putting money into an investment portfolio can help it grow.
One common strategy to take advantage of specialized, tax-advantaged retirement savings vehicles like 401(k)s and IRAs. For those eligible, these accounts allow savers 50 and over to put away more than the annual limit in catch-up contributions (for 2023, $7,500 above the $22,500 limit for 401(k)s, and $1,000 above the $6,500 limit for IRAs).
Prepare for care
Odds are high that you are or may find yourself caring for an aging parent—physically, financially, or both. There are many questions to consider as you evaluate the best way to help while also thinking about your own financial security. How much help is needed? How do I balance my obligations with those of my siblings? Will my parents require short- or long-term care, and do they have long-term care (LTC) insurance to cover expenses?
Ideally you’d start planning before this type of care is required so your parents qualify for LTC coverage, but that’s not always realistic. Wherever you are in your planning, research the full range of options—including 24-hour or part-time in-home care, Continuing Care Retirement Communities (CCRC), and nursing homes. Turn to trusted sources, like AARP, for information on caregiving options. Understand what Medicaid and Medicare do and don’t cover.
While not easy, these are the responsibilities that come with this life stage. The goal is to do what you can to help your parents age gracefully and provide the care they need. After all, they cared for us, and it’s our time to return the favor.
Beware of scammers disguised as suitors
Most of us crave companionship, but that can take on different stakes as we age. If your marriage ends because of a death or divorce, it’s natural to want to find new love—but be careful where you meet them.
Sadly, widows and divorcées are prime targets for online romance scammers. These bad actors will charm their way into your life, but after they’ve gained your trust, they’ll be stealing more than just your heart. According to data from the Federal Trade Commission, people aged 60 and above lost $139 million to romance scams in 2020, a sharp increase from $84 million in 2019. Unfortunately, I was married to a con man once, so I know about this all too well.
To protect your and your former spouse’s hard-earned savings, be hypervigilant with any new potential partners entering your life, especially online. If they start asking for gift cards, tugging at your heartstrings with stories of sick grandchildren, or otherwise trying to convince you to make changes to your financial accounts, cut off communication and steer clear. You can also report suspected fraud to the FBI’s Internet Crime Complaint Center.
Read ‘get rich quick’ as ‘too good to be true’
Romance scammers aren’t the only ones preying on older women and their wallets. It usually goes something like this: An acquaintance comes to you with an investment opportunity that’s already turned her a profit, making sweeping statements like “you can double your money in six months.” Despite your gut telling you something is off, you decide to give it a chance. Before you know it, your investment has been used to pay out a previous “investor,” and you’re part of the latest Ponzi scheme.
While a portfolio of carefully vetted investments can help you reach your financial goals for the long haul, there are no “get rich quick” schemes that work. If someone approaches you with an opportunity that seems too good to be true, look for the signs: an unprofessional website, requests for a lot of personal information, few references to third-party custodians or government bodies, and a lack of information on mainstream financial websites.
Find your advocate
No matter their life stage, I encourage all women to enlist a financial advocate: someone to bounce financial questions and ideas off of, keep you accountable, and help you stick to your plans. Friends and family usually give great advice and have your best interests at heart, but personal feelings and privacy concerns can sometimes make those conversations complicated.
A professional, like a financial adviser, Certified Financial Planner, Certified Public Accountant, or attorney, can offer more objective guidance. Importantly, financial professionals have an obligation to research any and all investment opportunities their clients present to them, so they can help sniff out anything suspicious.
Prioritize your financial life
Many of us put off thinking about money until a major life event forces us to do so. But you owe it to yourself to make your financial life and goals a priority—not just on International Women’s Day, but every day. A bit of research and planning can help you avoid the pitfalls and enjoy the retirement you deserve.
Cary Carbonaro, CFP, is the Director of Women and Wealth for Advisors Capital Management.
The foregoing content reflects the opinions of Advisors Capital Management, LLC and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.
