Be prepared for the stunning moment when you realize you are about to live off your retirement savings. Bernice Bratter and Helen Dennis, authors of Project Renewment: The First Retirement Model for Career Women, pose five questions to help you figure out your relationship with money.
“If only I knew how long I would live,” lamented a sixty-year-old architect. “I know I’ll be fine if I die before I’m eighty.” Perhaps the biggest unknown is how many years are ahead of us. The good news is that we are living longer. The bad news is that our money may not stretch to those bonus years. Stephen M. Pollan and Mark Levine suggest in Die Broke: A Radical, Four-Part Financial Plan that the majority of us will not be able to retire in the way that our parents did. The Congressional Budget Office does not agree, suggesting that Boomers’ savings behavior is similar to their parents’. Yet only half are saving enough for retirement, assuming they maintain the same standard of living.
Financial planning is critical to establishing economic security in retirement. It is a logical process that requires analysis, projections and strategies, methods that are not new to most of us. As women, we engage in financial planning with an added dimension — our gut feelings about money.
Olivia Mellan, a psychotherapist specializing in problems that involve money, reminds us that women have a history of economic dependency, first on our parents and then, in many cases, on our mates. As competent professionals, most of us want to retain our independence and as a result “tend to have global cataclysmic fear about losing all (our) money and ending up on the street.” Mellan believes the root of this fear is based on years of feeling powerless to make enough money to support oneself.
How we think about money is not necessarily rational. Those of us who have accumulated wealth may park and walk ten blocks to avoid paying a parking lot fee. We may shop at thrift stores for our clothing, drive five miles to use a twenty-cent grocery coupon and remain conservative in our expenditures. Those of us with modest incomes may purchase Audis and wear Armani clothing. How we spend doesn’t always make sense.
Attitudes play a role in our money behavior. Our parents and early childhood experiences influence how we feel about money. Many of our parents were immigrants who scrimped and saved to buy a home and educate their children. Some lived through the Depression. Many were fiscally conservative because they wanted security and felt a responsibility to leave “something for the children.” Their mantras were “Never spend the principal,” “Never pay interest” and “Always pay cash.”
We absorbed their behaviors and advice. Regardless of the money we accumulate, their mantras still influence some of our decisions and fuel our fears about money. Our parents’ warnings are in our heads. The “bag lady syndrome” is a tough image to overcome.
“My parents were impoverished as children and young adults; they lived in fear that they would once again become poor. They passed those fears on to me, even though by the time I was born, my parents were financially comfortable.”
The fears persist. “I hang on to old clothing and old things because I am afraid that someday, I will not have the money to buy the new things that I may need, such as clothing and appliances.” “I am afraid I will run out of money before I run out of life.”
“When I retired, I knew what I had and knew it was not enough. I panicked to the point I felt sick in my stomach. It was clear that I had to figure out ways to get more income. In a few years, I’ll probably have to sell my home — which will be very hard.”
What are the realities? Poverty and old age are important women’s issues. Older women are twice as likely to be poor as men. The annual median income for women 65 and older is about $3,000 above the Census definition of poverty or $11,816.5 Ninety percent of all women, at some time in their lives, will be totally responsible for their own financial welfare.6
We internalize these floating data and statistics, knowing that age and gender are risk factors. This awareness drives our worry. Even though we have income, savings and a retirement plan, the feeling of vulnerability remains. Yes, we are becoming more informed and financially empowered, but many of us feel we aren’t where we need to be, just yet.
Being married doesn’t change the concern. Although many of us were raised to believe that our husbands would be the ultimate and eternal providers, we know that in many cases, it is not true. Judy Resnick, author of I’ve Been Rich. I’ve Been Poor. Rich Is Better, tells women that they must take responsibility for their financial security whether or not they are married or have a partner who shares expenses. She writes, “Total dependence on others can be dangerous to your health and your wealth.”7
Perhaps the fears never disappear. At least we can diminish them by realizing we are in charge of our financial future and if we are willing to take the necessary steps to plan for it.
Questions to ask yourself:
- What is your attitude toward money? What has influenced your attitude?
- Do you have a financial plan that you understand?
- What concrete steps could you take to increase the security of your financial future and increase your comfort level?
- Do you know how to assess the competency and ethics of financial planners? Do you know how they earn their money from clients?
- In what ways will retirement affect your lifestyle and will you have the income to support it?
ABOUT THE AUTHORS
Bernice Bratter, is a licensed marriage and family therapist and an advocate for both women and the aging. In recognition of her leadership in the nonprofit arena, she has received numerous awards including an honorary doctorate of law degree from Pepperdine University. She has been featured on 60 Minutes, 20/20 and in Hour Detroit magazine. Helen Dennis, a nationally recognized leader on issues of aging, employment and retirement, has received awards for her university teaching and contributions to the field of aging. Editor of two books, popular speaker and weekly columnist, she has helped more than 10,000 employees prepare for retirement. Her expertise is sought by employers, national publications like The Wall Street Journal and such network news programs as ABC’s Primetime. They are the authors of Project Renewment: The First Retirement Model for Career Women (Copyright © 2008 by Bernice Bratter and Helen Dennis).
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