The COVID-19 pandemic heralded what NBC and other news outlets are calling a “She- cession” – a recession that has particular impact for women of all ages. An unexpected population impacted by COVID-19 – women of retirement age.
Prior to the pandemic, women of retirement age were disproportionately less secure financially than their male counterparts of similar age. There are several facets that contribute to this. Throughout their careers, women earn less and are often caregivers of both the young and the elderly. In the U.S. 70% of mothers work, and almost one-quarter of women ages 55 to 64 care for an older relative. Frequently, the only option for these women is part-time work; women represent 24% of the part-time workforce— twice that of men.
The pandemic in particular impacted how women of retirement age perceive their financial security and future economic stability resulting in a changed financial priorities.
Women in Retirement: Changing Sentiments Toward Retirement Planning
According to the Nationwide Advisor Authority Study, retirement age women are concerned about the impact of the COVID-19 pandemic on their finances and the resulting uncertainty can make planning for the future—and their retirement—more difficult. In fact:
- Three out of four woman that have 100k in assets has said the pandemic has negatively affected them and their plans for retirement.
- 55% of woman are looking to invest an annuity so they do not outlive their income.
- The number one concern with woman in the “she-session” is protecting their assets, which is up over 10 points from 2020, currently at 36%.
- 82% of woman are concerned about a recession in the next 12 months due to the COVID-19 pandemic.
With losses from the pandemic rising to the top financial concern for women in 2020, how can advisors and agents proactively address COVID financial concerns with their female clients who are approaching retirement or are concerned about the longevity of their existing retirement?
Have the Pandemic Conversation with Clients
Having this data in hand, you can proactively plan to ask clients questions to ascertain their personal concerns about the pandemic. How many of you have touched based with your female clients in the last year to see if they had any changes? Have you done an annual review via zoom with them?
As we recognize the anniversary of the COVID pandemic and social isolation, this may be an opportune time to reach out to your women clients to inquire about their personal experience this past year and how their retirement goals may have changed as a result. For example, the pandemic could’ve heralded a job change, which may have a dormant 401k money to possibly move into an annuity or a long-term care policy.
Key questions to ask your clients are:
- Have you lost your job due to COVID?
- Have you started a new position?
- Have you changed your spending and saving habits since the pandemic started?
- What is your outlook on the future and has that changed?
- How concerned are you about your “nest egg”? Has this concern changed this year compared to last year?
Discussing Future Care
Another big question to ask you clients is who will take care of them if something were to happen to them? Have you had that conversation with your clients? If not, I would recommend having that conversation sooner than later. As a result of the pandemic, there could be a need for additional life insurance, for themselves, children, or grandchildren or also a need for long term care. Not all adult children want to take care of their parents or the adult children might live in a different state and are not able to relocate if something were to happen to their parents.
Inquiry about a beneficiary review can also be helpful. Review a clients designated beneficiaries to make sure there is more than the primary beneficiary listed and there is a contingent beneficiary also listed. Do you have both of the beneficiaries updated name, phone number and address? If you are not having these conversations with your client, who is? You are their trusted advisor and expert.
Navigating Market Risk
As the pandemic drives concern of financial stability, more women of retirement age are considering guaranteed financial solutions which may protect their future. According to the Nationwide Advisor Authority Study, nearly 6 in 10 women or 59% of women would like to invest a portion of their portfolio in an annuity to protect against market risk. Additionally, 55% of women of retirement age prefer to invest in an annuity to protect against outliving their savings. Annuities are a product that advisors may recommend to help navigate client concern about stability of retirement during uncertain times.
Empower Clients to Re-Examine their Financial Status
In closing, woman who are pre-retirees or have retired are facing new challenges in the last year, more than they have experienced before. Some clients have been actively re-examining their life insurance to make sure their current amount is sufficient for their family, are invested in having a long term care plan in place, and are making sure all of their important documents have been updated to reflect any changes in the last year.
This is an opportune time to have conversations with your female clients to find out what has changed, what needs to be re-assessed, and how to achieve their goals for retirement moving forward. I wish you all a safe and health month and I am here to help all of you with any questions that you might have. As we like to say at DMI: “We are all in this together.”