Today, we will take a look at the unique financial opportunities and challenges facing women in today’s workforce, and what it all means with regard to your retirement.

Before we jump in, a lot of people have asked me, “Why do women need their own presentation about retirement? Women work just like men, we’re enrolled in the same retirement plan. Why isn’t there a presentation called ‘Men & Retirement’?” Those are good and legitimate questions. I hope by the end of our meeting, you’ll see why women should have this attention.

Today’s goals are pretty straightforward. I want to make sure you understand the issues facing women today. I’ll teach you about “ALPIE,” a handy acronym to help you wrap your head around your financial picture. We’ll discuss steps you can take to build a retirement plan, starting today. And last, but far from least, I’ll tell you how Empower Financial can help you navigate the road to a comfortable and confident retirement. 

Let’s take a closer look at some of the issues that typically have a deeper impact on women than men. We’ll look at these one at a time:

• Longevity
• Time in the workforce
• Pay disparity is real
• Putting others first

Challenge #1 - Longevity

Longevity essentially means taking a look at the years you’ll have in retirement. And it may sound odd, but there is some “risk” associated with living a long life. The concern is that you’ll outlive your retirement funds. 

If we knew how long we’d live, retirement planning would be easy. We’d know exactly how many years we’d need to prepare for. Although none of us can say exactly how long we’ll live, the Social Security Administrationestimates that a 65-year-old man today can expect to live, on average, until age 84. And a 65-year-old woman can expect to live to 86 and a half — that’s nearly 22 years of retirement to fund! 

https://www.ssa.gov/planners/lifeexpectancy.html

When thinking about longevity in retirement, you also have to consider healthcare costs. Hopefully, you won’t have any unforeseen medical expenses in retirement — but it’s certainly possible and we all know how expensive that can be. So while you’re planning for upwards of 20 to 30 years in retirement, consider that your healthcare costs may be more than they are today. 

Challenge #2 — Fewer Years In The Workforce

Next challenge — women often spend fewer years in the workforce than men. Whether its time spent caring for children — or the growing number of women who are looking after aging parents — the years away from the workforce impact much more than the missing salary. 

Sure, the most obvious financial impact is the lack of a salary. But the years spent caring for children or elderly parents can also impact your potential for promotions and raises, you’ll have fewer years to contribute to your workplace retirement plan, and your Social Security benefit will likely be impacted. Social Security benefits are calculated by your highest 35 years in the workforce. So working fewer years can affect your benefit. 

Making the choice to leave the workforce is certainly not taken lightly by anyone, and sometimes it may be the best option for you and your family. But knowing the full impact of your decision is important. 

Challenge #3 — The Pay Disparity

I’m sure you’ve heard about the pay gap between men and women. While there may be some debate over the exact amount, women in general often earn less than men for doing the same work. The gap may be shrinking, but until it’s gone altogether, women have to be strategic with their money. They earn less of it, and they have to make it last longer.

Source: ”The State of the Gender Pay Gap 2020,” PayScale, March 31, 2020

Challenge #4 — Putting Other First

Selflessness sometimes distracts women from preparing for their own future.

I  just laid out several challenges facing women as they think about retirement — longevity risk, healthcare costs, less time in the work force to save, pay disparity, and family obligations.

Hopefully you realize that at the very least, you’re far from alone. So what can you do?

I’ll start off by introducing you to ALPIE. 

I have an important question for you: Do you and your partner share responsibility for all of these things equally? Or does one of you serve as the "Chief Financial Officer" of your home? [For in-person only: Let's see a show of hands — how many of you would say both you and your partner are equally engaged in managing your finances? Ok — and how many of you would say one of you — either yourself or your partner — manages everything and the other partner is pretty much clueless?]

If you and your partner are equally knowledgeable about all the parts in ALPIE, kudos to you! But for those of us where one person manages most of the finances — whether that's you or your partner — including the other party is a big part of retirement planning. 

Once you have a better idea of your financial situation – with the help of ALPIE – you can start to build a financial plan. It’s helpful to look at financial planning in these three steps:

• Set and prioritize your goals
• Balance your budget
• Know Your Retirement Outlook

Anyone remember the first time they visited New York City, or any big city? Did you arrive at your airport, hop on the first flight to JFK, and just head out on the town straight from there? Chances are you spent some time planning your trip. 

You looked up flights in advance — you decided what you want to see — and prioritized which sites to visit in case you couldn't make it to all of them. 

This is a handy metaphor for retirement and financial planning. You need to give yourself time to plan and prepare — and when it comes to retirement planning, you can never start too early.

It will help to set a goal — when would you like to retire and what would you like to do in retirement? — and then prioritize those goals. By thinking about those questions, you'll have a better idea of how much money you should be setting aside today. 

Finding a balance between living for today and planning for tomorrow can be tough. In today’s society we have a lot of expenses that all seem necessary — from clothing to your phone and cable bills, car payments, rent or mortgage — plus there has to be some time for fun stuff, like an occasional dinner out or vacation. If you’re lucky, then maybe after paying for all the so-called necessities you’ll have money left over that you can save for retirement, right? That’s how most people look at saving: as an afterthought. Is that kind of how you see it?

What if instead of taking on retirement planning as an afterthought, it was right up there with paying the mortgage or car payment? So instead of saying, “I earn X and spend Y, so on a monthly basis I’m able to save Z … what if we said, “I earn X and I want to save Z, so therefore I will limit my additional monthly expenses to Y. You see how that can make a difference?

And for many people, paying off debt is also part of their budget, whether it's credit card debt, student loans...it's a huge reality for many people. If you maintain a balance on any of these debts, meaning you can't pay it all off at once, you'll have noticed how INTEREST keeps adding up on your original balance. That interest then becomes part of your balance, and it just keeps getting bigger and bigger, and harder to pay off. 

So, are you convinced that investing money in your retirement plan should be a priority?

If so, one of the most important things you can do is know Your Retirement Outlook. What does that mean, and how can you do it? On your Transamerica website transamerica.com/portal/home, you’ll see the weather icons that illustrate your forecast. It represents how much of your retirement income goal you’re likely to achieve based on your current strategy, so you can easily see how you’re doing.

For example, “rainy” means your current approach will likely generate less than 65% of your annual retirement income goal. “Sunny,” on the other hand, means you’re on target to meet at least 95% of your goal. If you haven’t entered a goal, 80% of your current income is the system’s default setting –meaning you want to have 80% of your current income in retirement. But you should consider your personal needs and goals and increase or decrease that percent as you wish.

You’ll see these weather icons using Transamerica’s mobile app, on your statements and on many of their resources and ongoing communications.

A key part of any financial plan is investing for retirement. Notice that I did NOT say “saving for retirement,” and there’s a big difference. 

Let’s say you’re doing an excellent job saving money. You have an emergency fund in your bank that you add to regularly. You might think that’s all it takes to prepare for retirement. But, there’s a problem with this approach. The money you save today will probably not buy the same amount of goods in 20 years or more because of inflation. 

This slide represents how little $20 buys today compared with the past. If you walked into a grocery store in 1999 with $20, you could buy a few bags worth of food. With each passing decade, that same twenty-dollar bill will buy you less food. But if you invest that $20, it may be able to grow to stay ahead of inflation. 

Your retirement plan has investment options for people who want to manage it themselves or for those who want to use an automated investment option.

If you prefer to select your own investments, you can. Before you do, consider the following: 

Are you comfortable with investing principles, such as diversification, asset allocation, and risk? 

Will you give yourself time to monitor and rebalance your portfolio? 

Or, you may want to choose from an automated investment option or service. To see the various options available, log in to your account at Transamerica.com/portal/home and click Manage on the left-hand menu. Again, if you have any questions about these services, I can help. 

As we wrap up our discussion, I’d like to share a few resources we have to offer. 

First and foremost, visit Transamerica.com/portal/home to enroll in the plan if you haven’t done so already, or to log in to your account. This is where you’ll be able to manage your retirement account and make adjustments as you want. 

There are also some great educational resources this website. You can explore topics like budgeting, paying down debt, and dozens of other financial wellness topics. 

I hope this presentation encourages and motivates you to take action.