Aarons Blogging

This is a post from staff writer Robert Brokamp of The Motley Fool. Robert is a Certified Financial Planner and the adviser for The Motley Fool’s Rule Your Retirement service. He contributes one new article to Get Rich Slowly every two weeks.

One of my jobs at The Motley Fool is to serve as the internal financial planner for Fool employees. Lately, however, I’ve been answering more questions my colleagues have about their parents — and it’s more likely about their mothers or mothers-in-law. The truth is, women face a more difficult task when it comes to retirement planning, for several reasons:

Women earn, and have, less. According to the Census Bureau, women earn just 77% of what men make. They are also more likely to interrupt their careers to raise children or take care of older relatives. According to the Social Security Administration, the typical woman spends 12 years out of the workforce. This results in lower retirement benefits and smaller portfolios. On average, a female’s 401(k) is 40% less than a male’s.

Women live longer. Generally, retirement begins when a person leaves the workplace and ends when life leaves the person. The longer someone lives, the longer retirement lasts — and the more assets will be needed. On average, gals live five years longer than guys, which means they tend to be retired longer. Add to this the fact that, with most couples, the wife is a few years younger than the husband, and you can see why most women should plan on spending their last few years on their own. Which leads us to…

Women are more likely to spend part of their lives single. Though my wife may not believe it, marriage enhances retirement security. According to a National Bureau of Economic Research study by Susann Rohwedder and Michael Hurd, 80% of married couples in the 66-69 age group are adequately prepared for retirement, whereas just 55% of single persons have enough resources. Unfortunately, more than twice as many older women are single than older men. According to the Census Bureau, 19% of men over the age of 65 live alone, compared to 40% of women in the same age group. More than two-thirds of 85-year-olds are women.

Women tend to retire earlier. According to the Center for Retirement Research at Boston College, the average retirement age for men is 64, whereas the typical woman retires at age 62. This is often because a wife will retire at the same time as her husband. It’s just another reason why women can be expected to fund a longer retirement than men.

Women often leave financial planning to their husbands. According to a survey from ING Direct and Dailyworth.com, 40% of married women leave retirement planning to their partners, and almost 30% say they don’t know what their main source of future retirement income will be. This leaves widows and divorcees vulnerable when they find themselves single again, and could contribute to a general lower knowledge about money matters. According to studies by Dr. Annamaria Lusardi, director of the Financial Literacy Center, women score 12 percentage points lower than men on tests about concepts such as inflation and diversification, as well as other measures of financial literacy.

What’s a Woman to Do?
While all those statistics can be discouraging, the good news is that there are plenty of solutions. Here are the steps all women (and the men who love them) can take.

Become a money master. Regardless of whether you’re single, married, or living in a hippie commune where no one bathes but someone has to pay the bills, make sure you keep learning about financial planning and have a hand in the household finances. According to a study from Hartford Financial Service and the MIT AgeLab, couples who share the financial housework are more prepared than couples that rely on just one member to do all the financial lifting; the former group is more likely to have saved more and developed a plan for what will happen when one spouse passes away. This doesn’t mean that each spouse must do everything together, but it does mean that each spouse should know enough about what’s going on, and how to manage the family finances in the case the other spouse becomes ill or passes away.

Manage the couple’s benefits with the survivor in mind. The timing of when one spouse begins receiving Social Security and pension benefits (if any) can affect the financial security of the other spouse. The questions to ask are: 1) Will the primary beneficiary receive a larger benefit for delaying, and 2) how much of the benefit will go to a surviving spouse? In the case of Social Security, the benefit does increase for each year of delaying, which can be very important source of income for a retiree whose lifetime earnings record is not as high as her or his spouse’s, because that higher benefit will continue to the lower-earning spouse when the higher-earning spouse passes away.

Be ready to be on your own. The last time I covered this topic in a GRS post, a reader linked to a New York Times article, written by a woman who had once been an advocate for stay-at-home motherhood:

So I was predictably stunned and devastated when, on our 40th wedding anniversary, my husband presented me with a divorce. I knew our first anniversary would be paper, but never expected the 40th would be papers, 16 of them meticulously detailing my faults and flaws, the reason our marriage, according to him, was over….

The judge had awarded me alimony that was less than I was used to getting for household expenses, and now I had to use that money to pay bills I’d never seen before: mortgage, taxes, insurance and car payments. And that princely sum was awarded for only four years, the judge suggesting that I go for job training when I turned 67. Not only was I unprepared for divorce itself, I was utterly lacking in skills to deal with the brutal aftermath.

I hate to be so cynical as to suggest every person should be ready to become single at any moment, but I do think everyone should have a Plan B at the ready.

Delay retirement until everyone is ready. The decision to retire should not be based solely on whether both spouses have enough money to cover expenses, but also on whether a surviving spouse would be secure should the other spouse pass away. According to the Hartford study, the typical widow sees her income drop 50% when the husband passes away, yet expenses drop just 20%. To make sure they have enough in their later years, people should continue to work — and save — until they have enough to survive on their own, and not retire just because their spouse does.

Everyone should know the team. If you use any financial-services professionals — accountants, advisors, attorneys — both spouses should know at least enough to know what they do for you, and how to contact them. If you don’t use pros because one spouse does the work, you may want to begin assembling a team in your later years to smooth the transition in case that one spouse is no longer able to do the job. You can start with a fee-only financial planner, such as those who belong to the Garrett Planning Network or the National Association of Personal Financial Advisors.

The Times, They Are A-changin’
These kinds of posts can be tricky, since they’re based on generalizations that obviously don’t apply to every woman or couple, and can come off as sexist. To be sure, I know plenty of couples in which the wife is in charge of the household finances. These folks tend to be younger, which is why I think the difference in retirement prospects for women and men is partially a generational issue. It’s certainly my experience that women in their 70s — like my mother, who found herself divorced and re-entering the workforce in her 50s — are more comfortable leaving all the financial housekeeping to their husbands, and also less comfortable talking about money. Maybe that’s just my personal experience. But I do hope, as the income gap between men and women shrinks, and more men share in the child-raising responsibilities (for example, The Motley Fool offers paternity leave to new dads), that a post like this will be largely unnecessary several years from now.

Related Blogs

Lightning strikes new French President François Hollande’s plane as he flies to Berlin to discuss the European debt crisis with Chancellor Angela Merkel.

Related Blogs

Greek politicians are again trying to form a new government as fears grow the troubled country could run out of money to pay debts, causing it to crash out of the euro.

Related Blogs

I’ve wanted to write about money and gender for YEARS.

I have the most RIDICULOUS set of stories about friends, marriage, dating, salaries, negotiating, and investing between men and women…plus, books and books of academic studies I’ve read.

Examples:

• What do women think when they hear a guy wants someone “who can take care of the house”? What do men think when they meet a girl who wants a “big ring”?
• Who handles money better? Under what circumstances?
• What happened when I met my first official gold-digger?
• Who’s better at negotiating — and why?

But I’ve avoided it because I was afraid.

Because whenever you write about money and gender, people lose their damn minds.

They instantly jump to conclusions and bring their gigantic chips on their shoulders to the arguments, demanding that you cover every single aspect of money and gender.

Just look at these comments from a recent blog post:

“Unless Ramit is highly skilled in gender studies, he should be careful about reporting these results. A non-academic study of how African American men manage their finances vs. how Caucasian men do would be frowned upon, and it should be no different in ‘comparing’ genders. What’s to compare?” – Joanna

“You did not allow for nonbinary gender. And if you are assuming all relationships are straight I shall be quite cross.” – Andrea

“IMHO, I don’t think it’s possible to tie financial capability to a gender any more than it’s possible to tie “parenting” or “eating veggies” to a gender. For every man or woman who is good with money, there’s another who is a trainwreck. Tying money to gender is stereotyping, which makes for great sensationalism and lots of eyeballs, but that’s about it.” – Linda

“The title of this post doesn’t make sense.” – Josh

To avoid the predictable furor, I’ve collected thousands and thousands of data points, as well as reading several books on gender on my recent vacation.

But it doesn’t matter!

People are not rational about gender and money. (In fact, people are not “rational” about most things.) But when it comes to gender, they take their own individual experience and extrapolate it to the rest of the world, which makes everyone avoid sharing what they really think.

Well, I don’t want to avoid it any more.

There’s a gigantic gap between what we SAY and what we DO when it comes to gender and money. Why not explore it?

Yes — MEN AND WOMEN ARE DIFFERENT WHEN IT COMES TO MONEY. Read that last sentence again. If you steadfastly cling to the idea that men and women are “equal” (in this case, meaning they behave identically) around money, you are simply asking to be deceived. Let’s explore the similarities and differences instead of deluding ourselves.

For example, would you care if your significant other made more than you?

Recently, I was at a dinner when someone asked me if I would care if my future wife made more money than I did.

After I answered, I went on Twitter and asked two questions:

1. Guys — would you care if you made more than your wife?
2. Ladies — would you care if you made more than your husband?

What do you think the responses were? What do you think the truth is?

• CLICK TO TWEET: I wouldn’t care if my partner made more money than me.
• CLICK TO TWEET: I would care if my partner made more money than me.

Leave a comment here and let’s get the discussion going.

Related Blogs

Greek politicians trade insults and accusations following efforts to form a unity government — increasing the possibility of a new poll in the debt-stricken country.

Related Blogs

A video purportedly released by a shadowy, Syrian-based terrorist group says it carried out the dual suicide bombings that killed dozens in the country’s capital.

Related Blogs

This is a guest post from Belinda James. Belinda is currently attending Trident Online University and earning her master’s degree in business administration. In her spare time she writes automotive articles for Nissan Minneapolis.

A few years ago I had a regular administrative 9-to-5 job working for one of the three credit bureaus. It was an okay job with an annual pay of around $33,000 a year. In 1998 that was more than enough to pay for a tiny studio apartment, take care of monthly bills, and pay for my shopping sprees at Forever 21 (I still shop there, actually).

However, everything changed when I bought my first computer and started fiddling around the Internet. Somehow I ended up clicking a “Webmasters Click Here” link on a website and figured out that it was possible to make money online. After I received my first $20 commission check I was pretty much hooked.

It took a lot if trial and error but by 2006 I was pulling in around $10,000 a month from promoting affiliate programs online. I had high-traffic websites and would generally earn $30 or $35 every time a web surfer made a purchase through my affiliate link. In a great month I would make around $13,000 or $14,000 and in a “bad” month maybe $8,000. At one point I had more than $80,000 in the bank!

But I made a lot of mistakes that cost me everything. Eventually, my income dwindled so much due to the recession and industry changes that I was forced to look for a job again. Here are my hard-learned lessons that might save you a lot of grief if you’re running your own business (or think about starting one):

1. Pay your quarterly taxes on time
When you are self-employed you generally receive 1099s from the companies that you work for, and it’s your responsibility to file your taxes quarterly. I used to file mine yearly; I was making a lot of money so financial penalties (even in the thousands!) didn’t bother me.

One year I really overspent and I was wiped out once I paid taxes at the end of the year and never was able to recover from it financially. My income continued to plummet every year, but I was still responsible for income taxes for previous years. Paying your quarterly taxes in a timely manner ensures that you won’t get caught behind, because once you do it can be nearly impossible to catch up.

2. Find a good accountant
Having a qualified CPA in your corner is crucial if you want your business to survive. I never incorporated so I was responsible for self-employment taxes. I never found a solid accountant that I could trust. One CPA charged me $650 an hour and didn’t do anything for me that I couldn’t have done for myself. I was told that it wasn’t worth the extra paperwork for me to incorporate because my earnings weren’t high enough.

3. Don’t tie up a large chunk of your money in a car
When I was making a lot of money I bought a used Mercedes. It was certified pre-owned car, and I paid around $43,000 for it, in cash. Was it the smartest decision ever? No. But do I truly regret it? I would honestly have to say no (even though I know most people will disagree).

I like to enjoy life, and I’m not going to lose sleep over a purchase I made a long time ago. However, if your goal is to really get rich slowly, you will probably want to buy a used car instead.

4. Nothing lasts forever
When I was making six figures a year I was convinced that it would last until retirement and that I was financially set for life. Call it naivete or “sticking my head in the sand”, but I never thought that the money would run out. The truth is that nothing lasts forever, so enjoy it while you can.

Hindsight is 20/20
What else would I have done differently? I would have worked harder and smarter. I would have rented office space and ran things more like a real business. I would have hired employees to do the grunt work. I also would have expanded my business and not concentrated solely on doing the same thing over and over. My goal at the time wasn’t to get rich slowly, but to enjoy life, and that I did.

I do have a few regrets, but I still had a great run while it lasted!

Related Blogs

Have you ever bought something only to discover that this one purchase led to another? And another? And another? I have, and it’s frustrating.

Andrew thinks this sort of problem is frustrating, too, and he recently wrote to ask for advice on handling situations like this. What do you do when one expense leads to another? How do you put a stop to it? How do you predict problems like this so they don’t happen in the future? (Or so that you can mitigate them?)

Here’s his question:

Where do you stop when one purchase leads to another, and then another, and do on?

I recently decided to buy a new bed, as I was tired of the platform bed I’d been using for years. I also upgraded from a full to a queen size, which meant I had to buy new bedding as well. However, I wasn’t anticipating that the bed would be too high for my dog to jump up on, so rather than put up with the pacing and pleading eyes, I went out and bought a sturdy set of dog steps.

I was considering buying a deep freezer, so that I could take advantage of economies of scale with meats, vegetables etc. But then the thought hit me: what if the power goes out and I lose all that good? Should I also buy a generator?

I’d like to ask the readers for examples of how one well-intentioned purchase spirals out of control!

I think this is a great question. In my life, I’ve had tons of expenses that kept leading to more expenses. (In a way, this is like shopping momentum, the psychological trap that occurs when you buy one thing, which increases the likelihood you’ll buy others.)

Buying a house, I think, is the classic example of this situation. Nearly every homeowner has experienced that shocking spiral of spending that happens when you move in. There’s a reason for the common rule of thumb: Budget one percent of your home’s value for repairs every year. But it goes beyond simple home maintenance. When you move into a new place, it seems like there’s a host of new things you need: power tools, window treatments, household goods, and more. Even if you already owned a house, the new house demands specific stuff, you know? And it’s expensive!

But there are other examples, too.

It used to be when I bought a computer, for instance, I had to buy all sorts of accessories to go with it. When I bought my Nintendo Wii, I had to buy extra games and controllers and so on. (Obviously, I didn’t have to buy these things, but I chose to do so. One expense led to another.) When I buy a car, I have to buy floormats and jumper cables and an ice scraper and so on. And although I carry a naked cell phone, when most people I know buy a new one, they buy a host of gadgets to go with it.

So, where do you stop when one purchase leads to another?

First, I think it’s important to be realistic about the things you buy. For instance, when Andrew bought a new bed of a different size, he should have realized he’d need to buy new bedding. If I buy a new bicycle, I need to understand that I’m going to want gadgets and gear to go with it. When you buy something, think carefully about whether that purchase is going to lead to others as well.

But some expenses can’t be predicted, of course. That’s often the case when buying a new home or car. For cases like this, when you can’t predict or prevent the expenses, I think it’s still possible to budget for the unexpected. This is where it’s useful to have some sort of slush fund in a savings account. This isn’t necessarily an emergency fund, but something similar — a fund for coping with surprise costs that aren’t actually emergencies. (You’re not going to die if your new car doesn’t have floormats, right?)

What about you? Do you have any examples of when one expense led to another, snowballing out of control? How did you decide when to stop spending? Do you have a plan for dealing with the unexpected in the future?

Related Blogs

Over the last few years I’ve hosted 2 events here in Melbourne for bloggers. What started in 2009 as a quickly pulled together and very cramped and crowded event for 150 bloggers has grown considerable.

Today tickets have gone on sale for our October Event and it is going to be big – both in terms of attendee numbers, venue and what we’re setting out to achieve.

This year’s Problogger Training Event will be held over 2 days at Melbourne’s Etihad Stadium (or rooms within the stadium). The dates are 12-13 October.

Great Speakers

The majority of our speaker lineup is from Australia’s amazing blogging community (we have some innovative and entrepreneurial bloggers here) but we’re also flying in Chris Guillebeau to bring a little international flavour. Chris will be presenting twice – once as a keynote and once in a workshop.

Other speakers and panelists include myself (I’ll be involved in 3-4 sessions), Sarah Wilson, Shayne Tilley (Web Marketing Ninja and regular contributor here on ProBlogger), Nicole Avery, James Tuckerman, Jules Clancy, Stan Lee, Mrs Woog Valerie Khoo and a load more (see the full list of confirmed speakers and panelists here).

A Focus Upon Building Profitable Blogs

The focus of this year’s event will be much more upon monetization and building profitable blogs. While we’ll touch on some more general topics in the course of the event the feedback from last year was that attendees wanted training on how to monetize.

As a result we’re featuring sessions that are very much on the topic of making money through a variety of methods. This will include sessions looking at the different models available to bloggers, advertising and working with brands, eBook creation, courses and membership areas, selling your services, sponsored posts and much more.

Solid Training

The style of teaching at this event is a combination of keynotes, panels and interactive sessions. However based on feedback from last year we’re including more ‘keynote’ presentations than previously to allow for more intentional ‘training’ and leading attendees through processes.

While there will be plenty of time for networking, discussion and a little fun at this years event – the feedback from our 2nd event last year was that we’d put on the most solid ‘training’ event in Australia for bloggers – we only want to strengthen that.

My intent for this event is that bloggers not only walk away with theoretical teaching but practical advice and strategies that they can go away and implement.

You can see our preliminary schedule here.

Secure Your Tickets Today

Tickets for the event this year will be price at $299.99 (AUD) but we currently have a limited number on sale for $249.99 AUD.

This price covers the 2 days of training, networking breakfast on day 1, all lunches and morning/afternoon breaks, drinks and food at a networking event (at one of Melbourne’s finest eateries) on the evening of the first day as well as a Digital Pass to the event (where you get access to audio recordings of the event and PDFs of the presentations).

Sponsors

This price is as affordable as we can possibly make it thanks to the support of some amazing sponsors -a special thanks to our Gold and Silver sponsors MYOB, Yellow Pages, Curtin University.

We do have a limited number of sponsorship spots still available for brands wanting to reach out to the Australian blogging community (and beyond).

Originally at: Blog Tips at ProBlogger

Early Bird Tickets On Sale for Melbourne ProBlogger Event – #PBEVENT

Related Blogs

Chilean officials are asking fishermen to help save birds caught in nets after thousands of dead fowl appear along coastal Chile this week.

Related Blogs