Financial Issues Baby Boomer Women Nearing Retirement Face

by Gary Foreman

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When the first baby boomer women were born in 1946, it was a different world. Although Rosie the riveter was a mainstay in WW2, many professions and jobs were basically off limits to them. These baby boomer women have witnessed many changes, and now as they face retirement, they're discovering still more firsts, many of them involving financial decisions that will affect their retirement years.

We wanted to explore some of the challenges and opportunities that women nearing or entering retirement face. To help us understand these issues, we contacted Rebecca Walser. Ms. Walser is a licensed tax attorney and certified financial planner at Walser Wealth in Tampa, FL. She specializes in strategic tax and financial planning for high net worth individuals, families, and businesses.

Q: Many baby boomer women have accumulated some wealth. Are their investment needs significantly different from boomer men?

Ms. Walser: Yes. Women's planning requires more life planning than men for both health and economic reasons, so their plan must account for these differences. Examples are that women live much longer, on average, than men, so the risk of running out of money or outliving your money is much greater for women than men and must be baked into their plan. A second example is that even while women are living longer, they do have additional health concerns later in life that cost money. One area of concern is end of life long-term care that can be quite expensive. So, women must plan for the healthcare cost shifting more so than men. One final example is that women experience widowhood more often than men and have to deal with the financial strain of the loss of dual income/Social Security benefit more than men. Planning around the loss of spousal income is another area that we must address and plan for.

Q: Personal finances have gotten much more complicated in the last three decades. Would you say that most boomer women have been able to keep up with the changes?

Ms. Walser: Based on our culture, many boomer women have left the financial picture up to their husband/significant other and may not be as familiar with these financial circumstances as they should be. Additionally, we are starting to see changes to Social Security and Medicare, which has not been the case for the last 40 years, due to the sheer number of baby boomers moving onto these programs. On top of all this, the expansively large volatile swings we have seen in the market since the beginning of 2000 is creating a new normal and must be addressed in any plan retirement, as volatility is the retirement income killer. Women that have left these areas to their spouse or who have handled the finances but have not addressed these issues need to discuss them with a qualified professional immediately.

Q: Are there any tax saving techniques that work better for women?

Ms. Walser: Taxes are gender neutral, but women have to plan around future taxes more than men because they live longer. Therefore, having all of a portfolio in pre-tax accounts will adversely affect women to a greater extent than men since we expect long-term tax rates to increase astronomically based on our debt picture and the retirement of the baby boomers, our largest organic born generation.

Financial Issues Baby Boomer Women Nearing Retirement Face

Q: What's the biggest estate planning mistake that you see baby boomer women making? And how do they avoid/correct it?

Ms. Walser: Since the estate tax exemption was increased in 2010, most Americans now avoid the estate tax entirely. However, this has caused many to avoid estate planning, which is not solely planning around estate taxes but also includes the legal disposition of property. Many think that trusts are now not necessary or only for the super-wealthy. The truth is that just having a will means that the family will be forced to go through the probate process, which is not desirable for three basic reasons. It is time consuming, expensive, and very public. A trust transfers property privately, saves time, and saves the expense of probate in the process. Do not fall into the trap of not completing estate planning because you will not pay an estate tax. They should be viewed as two separate things.

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Q: Many of your clients are business owners. What advice do you have for women in their 50s and 60s who are approaching retirement age?

Ms. Walser: Business owners are notorious for making a few common mistakes around retirement. First, they view their business as their retirement and fail to create a plan outside and apart from their business, which is a bad thing if the market crashes or your business takes a turn right before your retirement. Second, they do not prepare a formal business succession plan, which can be a cause of major issues when it's time to dissect and divide the business at retirement. These issues are universal to both men and women. However, women do have the unique need to plan for retirement differently for the reasons we have discussed already. Therefore, with these unique needs in mind, a woman's approach to retiring from her business should consider these differences. One generalized example is that longer business payouts, like lifetime payments, may be more suitable for a woman than a set period of years, which might work better for a man.

Q: What's the biggest financial opportunity that most mature women are not taking advantage of?

Ms. Walser: There are numerous financial assets that provide additional benefits without additional costs that go unused and unleveraged by so many women that could make a great difference in terms of not running out of money during their lifetime, not burdening their children with their care, and not exposing their portfolio to the huge swings of the market's volatility. Women do not leverage them because they do not know about them. They might have been with their same advisor for 30 years or perhaps they inherited their advisor from their spouse or some other family member. Often, the advisor that got you to retirement may not be the right advisor to see you through retirement as accumulating wealth is much different than distributing it throughout retirement. A change of direction and incorporating some of these financial tools might make all the difference between having a long-term care plan and lifetime income versus just hoping that your market portfolio lasts until the end.

Rebecca Walser is a licensed tax attorney and certified financial planner who specializes in working with high net worth individuals, families, and businesses at Walser Wealth. She earned her juris doctor degree from the University of Florida and her masters of law degree in taxation from New York University.

Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar website and newsletters in 1996. He's the author of How to Conquer Debt No Matter How Much You Have and he's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, and Gary shares his philosophy of money here. Gary is available for audio, video or print interviews. For more info see his media page.

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