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Retirement Planning: Do Women Need a Different Retirement Plan than Men? January 14, 2009

Posted by retirementwithaplan in retirement.
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Here’s the deal. Retirement Planning is an of itself, a multi-faceted structure of enormous complication. Much like lining up a room full of domino blocks. Only in retirement planning, you never knock them down. You just keep adding to them.

Some folks would have you believe that in and of itself, retirement planning is simply money socked away for an uncertain future. They understand long-term, which is a good thing. Problem is, from the minute you are born, your retirement plan has begun. It is a life cycle that is set in motion – not fixed by any means, but moving forward from the day you came into this world. As you grow, you add components, pieces that sometimes fit together, other times they won’t.

Some of those choices cannot be changed: Your days in school has led to a career, which impacted your family, and ultimately will help you decide how well you will retire. Everything you have done or will do contributes to well that retirement will be lived. And while you can’t go back and change what has happened you can decide to do it differently moving forward.

Now to the reason for the lengthy clarification. The other day, I received an email from Jenna Kozel. She is involved with a project called MyLifeMyFamily.com, a resource that she tells me “provides consumers with information about financial planning and long-term care insurance, myths and facts, resources and videos of people who have personally purchased long-term care insurance.” She offered the following graphs that accompany a study done by the long-term care insurance industry.

1 In portraying the economic downturn as having a greater effect on women than men does not make the need for long-term care insurance any more relevant. The economic downturn touched every facet of American economic life. Each day brings new trouble spots that will be months, if not years, to feel any sort of recovery.

This graph tells a general story rather than a specific indication of gender based stress. But that doesn’t make the matter any more palatable. The financial implications on a woman’s need for money will be much greater than a man’s and because of that, even more cautiousness will be needed.

1This graph asks the question of 1010 females between the ages of 30-59 years old whether thinking about their finances depresses them. It depresses just about everyone these days and for the obvious reasons.

But woman usually have numerous additional obstacles to their plans. Divorce plays a major role and probably contributed to the higher degree of anxiety in the sampling of unmarried woman. Even married woman have approached the financial part of their marriage as a no-woman’s zone, which I hope is not based on the misconception that the guy brings the financial savvy to keep it all together. They don’t and you shouldn’t trust that they know what they are doing.

We all know investing isn’t easy
If you, on the other hand feel overwhelmed by the abstract notion of investing, you can rest assured, you are definitely not alone. Investment bankers and and brokers have been outed as not knowing how things worked. That, at least psychologically, has leveled the playing field.

There will be more protections in place to keep these nefarious acts from happening again and that will make the process a little easier to approach. You will still have to approach it though and face it down.

But the idea of long-term care insurance as part of that newly revised plan is not a good one. The two are not intertwined they are outertwined. One is not necessary for the other to exist. You do not need to have long-term insurance and long-term insurance is not a needed component of a retirement plan.

You do although, if you have live with the following:

You want to leave as much as possible to your heirs and worry that should you become ill for a long-period of time, what you own will go to pay for the care. If this is the case, get your heirs to ante up. This is inheritance insurance that they need to finance. Not you.

If not me, then who?
You are afraid your spouse will lose everything. There is wide disparity among states, who are the ones that administer the long-term care program as to how much your resources factor in. Texas allows up to $500,000 in home equity while Louisiana allows only $104,000 in financial assets that can be turned into cash excluding the house.

You think you will not be healthy as an older person. Genetics play a role but so does how well you care for yourself now. Insurance offers protection from disasters. Do create your own personal health problems.

Yes women do need a different plan than men and because of that, they need to focus on the three most important parts of their retirement plan.

1) Your health. Taking care of it allows not only for extended years of enjoyment but, sad to say but needed to be said nonetheless, more years of income production to help shore up your financial plans.

2) Embrace risk. To do this , you must first understand it. Over at another blog I write for, there is an ongoing discussion about the different types of risk. You will live longer and have more time to recover from financial setbacks. Your natural flexibility will let you roll with the mistakes better than men which should help you with our first suggestion.

3) Buy only what you need. This not only applies to the real world of everyday personal finance but to the protection of your finances. The only five insurance policies you need are for your car, your property and your life. Unless your workplace provides it for you, health insurance and possibly a disability policy. That protection will cost plenty and if you are investing for your future, protecting your present and taking care of the budgetary details that life throws at you everyday, there is little likelihood you will be able to justify long-term care insurance as well..

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