As an advisor, I meet with single women quite often. Be it from divorce or the passing of their husband; I see women come into my office frustrated and fearful.
Women have different views and needs when it comes to retirement planning advice and 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.
There is a region of the brain called the amygdala that works as the risk assessment for every activity we do. This area is larger in women than it is in men so with considering risk, women’s larger amygdala causes women to stop and be very cautious. While men usually generally look for more risk and excitement, women tend to seek investments that are less risky to avoid the pain of loss.
Now, let’s look at the frontal cortex which processes emotional responses; once again that region of the brain is larger in women than it is in men. Thus, making women more sensitive and averse to taking a chance on negative outcomes. A woman will choose an investment option that will have less chance of sudden drops, and if losses do happen, they will be doubtful to go back 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 which is where the spatial mapping of the environment, estimating distances and directions come into play. So, where men can have directions of “turn south in 1 1/2 miles” women tend to like directions 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 do. 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 do. Women have an increased risk of bone disease, heart disease, and Alzheimer’s than men do.
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 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.”
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