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Widows, Divorcees Best Prepared of all Women Investors

Women who have gone through major life events, typically widows and divorcees, are often better prepared to deal with their own finances and retirement plans because they have been forced to sit down with an adviser, according to a recent study by OppenheimerFunds. "Financial planning shouldn't have to happen during times of crisis," said Lauren Coulston, assistant vice president, advocacy and training manager at OppenheimerFunds. "We need to engage women as early as possible to start saving for retirement," Coulston said. "Eighty to 90% of women are going to be responsible for managing their own finances at some point in their lives, due to longer life expectancies and higher divorce rates." OppenheimerFunds has conducted an annual survey of women's investing habits since 1992. This year's survey interviewed 1,050 men and women between the ages of 35 and 54 and separated them by gender and marital status. It found that 44% of women said retirement plans will be their primary source of income during retirement, but half said they were not participating in a plan. Fifty-two percent of widowed respondents were very confident about how they manage their money, compared to 23% of single and 20% of married women. In addition, the survey found that 46% of widows have visited a financial adviser, whereas only 16% of single and 24% of married women have. Furthermore, 43% of widows have no debt other than a mortgage, whereas 34% of single and 20% of married women reported no debt. "I have found that traumatic life events like a divorce or death of a spouse often bring someone into my office," said Harold Evensky of wealth management firm Evensky & Katz. Women are fundamentally better investors, Evensky said, not because they are more knowledgeable than men, but because they are more likely to listen to advice without letting their egos get in the way. In the old days, "money was a very dirty topic that women were protected from," said Barbara Steinmetz of Steinmetz Financial Planning. "The vast majority of women deferred involvement for various reasons." A married couple typically finds that each person has a different set of skills, Steinmetz said. Some people are better at money management, but it isn't gender-based. Evensky said most of his clients are married, but often only the husband will come in on the first visit. Getting Involved "We encourage them to bring their spouse in, and often we'll schedule a meeting with the wife, independent of the husband," he said. "We try to create a more comfortable environment where we discuss the philosophy of saving, markets, the nature of investments and how decisions are made. I find that women are much more receptive." Many women still rely on their husbands to take care of everything, but eventually, due to a variety of reasons such as illness, divorce or death of a spouse, women are being forced to take on that role, said Debra Neiman of Neiman & Associates Financial Services. The OppenheimerFunds survey found that 68% of widows listed retirement as their primary investment goal and were less likely than single, married or divorced women to cite a lack of extra money as a reason for not participating in a retirement plan. Forty-one percent of widows rely on a financial adviser for investing advice, while only 17% of divorced women, 17% of married women and 11% of single women rely on an adviser. Women are extremely goal-oriented and need to make retirement and healthcare needs their top long-term priorities, according to OppenheimerFunds, but many women have a difficult time getting started. A Clear Goal "You have to have a goal and work toward it," Steinmetz said. "If you don't have a goal, you don't know if you're getting closer. Wanting to retire wealthy is nice, but it's not a goal." "The thing I'm hearing all the time is, We need money now. We can save later. I've got a lot of years to go, and I don't even know if I'm going to be here,'" she said. "I have to explain to them in cold, hard numbers that if they don't do something now, they are not going to have a retirement." Even saving $50 a month over several decades could provide an investor with more than $500,000 by the time they retire, according to OppenheimerFunds. When informed of this, more than half of single and married respondents said they were strongly motivated to start saving, while widows were least likely to find this motivating. When female respondents were asked if they would use an extra $1,000 toward a vacation or retirement, more than half said they'd spend it on vacation. "It appears that women investors say one thing but do another when it comes to retirement savings," Coulston said. "This presents a good opportunity for advisers to try to engage women as early as possible." (c) 2007 Money Management Executive and SourceMedia, Inc. All Rights Reserved.