As an advisor, I meet with single women quite often. Whether from divorce or their husband’s passing, I see women come into my office frustrated and fearful.
Women have different views and needs regarding retirement planning advice for several reasons.
First, let’s look at the science behind why women consider investing differently. We can all agree that men and women think, feel, reason, and react differently, and that is because our brains are built differently.
A region of the brain called the amygdala works as the risk assessment for every activity we do. This area is more significant in women than it is in men, so considering risk, women’s larger amygdala causes women to stop and be very cautious. While men generally look for more danger and excitement, women tend to seek less risky investments to avoid the pain of loss.
Now, let’s look at the frontal cortex, which processes emotional responses; once again, that brain region is more significant in women than in men. Thus, making women more sensitive and averse to taking a chance on adverse outcomes. A woman will choose an investment option with fewer cases of sudden drops, and if losses do happen, they will be doubtful to return to that investment choice.
Speaking of emotions, that is the other difference, men think more about accumulating, whereas women tend to think about day-to-day living (will my money last???) and using the money to help others (legacy or charitable donations)
Moving over to the hippocampus, where the spatial mapping of the environment, estimating distances and directions come into play. So, where men can have hints of “turn south in 1 1/2 miles,” women tend to like rules of “turn left on Pearl Street, you will see a Chevron station on the left-hand side.”
When it comes to investing, men tend to look at investing in comparison to how and what their peers are doing, in other words, “traveling in the right direction.” Women like benchmarks, something they can visualize.
Now, let’s look at life and how women are more challenged than men when it comes to retirement planning:
Women live longer than men.
Statistics show that women live 6.5 years longer than men (although I have found most of the women I speak with have outlived their husbands by at least ten years or more), so women need their money to last longer than men. Women earn less than men do. This hits women hard in 2 places; women have less to invest in their retirement portfolio. Women tend to have a higher risk of needing long-term care than men. Women have an increased risk of bone disease, heart disease, and Alzheimer’s than men.
Couple that with the fact that women live longer; there is an 88% higher chance for females needing long-term care than men may require.
What does this all mean?
• “Can you guarantee me safety so that I know at least a portion of my money is safe, protected, and insured?”
• “Does this investment offer me a guarantee of doubling my monthly income without the risk of running out of money? Should I need long-term care?”
• “Does this investment guarantee that no matter what happens in the market, my heirs will receive the legacy I have earmarked for them?”
Those questions should be able to be answered with a simple “Yes or no.”