In recent years, the combination of important financial topics and women have getting more attention and rightfully so. Many of those conversations have been positive or, at the worst, neutral.
They’ve centered around subjects such as women being major beneficiaries of the great wealth transfer, positive lack of risk aversion relative to men and their willingness and desire for more financial education and top-tier advice.
Put it all together and many of the reasons women have for working with advisors and why advisors should increase their focus on women are positive. However, some of the factors that bring advisors and female prospects together are uncomfortable, including “marital transition” – a diplomatic way of describing becoming widowed, getting divorced or a separation.
Look, no one is immortal and divorce rates are high throughout much of the Western world so these shouldn’t be taboo conversation. If anything, advisors that have female clients that recently lost their spouse or got divorced should be proactive in initiating conversations that help solidify their financial futures, particularly around retirement.
Marital Transition Can Hamper Women’s Retirement Planning
As noted in PensionBee’s Q2 Happy Retirement Report, a quarter of women experiencing some form of marital transition have just a month (or less) of retirement savings, implying they were heavily dependent on their significant others for retirement savings. Conversely, fewer than 1 in 10 men are in the same boat.
“While 42% of Americans overall have less than one year of retirement savings, the outlook is far worse for women, who are nearly twice as likely as men to have alarmingly low retirement savings,” according to PensionBee. “38% of women report less than six months of savings compared to just 23% of men. ”
There are more reasons why advisors and women going through marital changes should improve their relationships without delay. PensionBee points out that just 38% of newly divorced or widowed women plan to increase retirement savings over the next year – well below the 57% of men that say the same thing. Likewise, just 4% of divorced, separated or widowed women max out yearly contribution limits on retirement accounts, or about of a third of the percentage of men doing the same.
"These aren't just retirement statistics, they're warning signs," said Romi Savova, CEO of PensionBee. "What our data reveals is that the gender retirement gap is real. Women face disproportionate financial risks during life transitions, and these risks can turn personal hardship into long-term retirement insecurity. "
Maybe Marriage Has Advantages
Other studies highlight financial advantages in matrimony, particularly if the couple is dual income. PensionBee mentions “structural advantages for retirement planning, leading to better retirement outcomes for married couples. ”
Obviously, the rubs are that are some point, someone in the marriage is going to spend some time as a widower and if the marriage isn’t a happy one, many men and women will sacrifice financial security for emotional clarity and improved mental wellbeing.
Advisors aren’t marriage counselors or family therapists marital turbulence definitely isn’t an area in which advisors should interfere. That said, for couples, there is retirement merit in attempting to work through marital strain.
“Retirement sentiment is highest among those who are married, with both men and women reporting considerable blows to their outlook following a major marital transition. While 50% of married people report a positive view of retirement, that number drops to 28% for women and 31% for men following divorce, separation or widowhood,” concludes PensionBee.
