Experience sheds light women’s post-retirement investment practices
14th October 2011 · 0 Comments
By Nayita Wilson
The Louisiana Weekly
Researchers and financial experts alike agree that women’s post-retirement investment practices are topics worthy of exploration. But until such data and suggested best practices emerge, it’s tough choices for today’s female retirees who, with or without financial guidance, face tough decisions about how to invest their hard earned savings.
When retirement day arrived in 2000, Darlean George of Westwego, La., had put in a faithful 30 years and six months at Bell South. Career-wise, she retired as an electronic technician (switchman), which offered less hassle and greater pay than the clerical role she started out in.
George was 51 at the time, hadn’t ruled out returning to the workforce and was in a healthy financial position after having invested in the company’s 401K plan and stock. Her greatest uncertainty at the time was how she would withdraw the funds.
On one hand, she could’ve opted to receive monthly retirement benefits from her employer. The downside was that if she died, her husband would receive benefits for one year; the remaining money would return to the company. So, she sought the advice of a financial advisor and decided to invest in an IRA portfolio.
“It was just a matter of consulting with the financial analyst and having her roll my money over into that account,” George said.
Such consultation was a needed step for a major investment, but nothing could’ve prepared her for what rocked her finances. One year into retirement, George lost half of her investment in the economic downturn that followed the terrorist attacks of 9/11. By the end of 2010, she had exhausted the remaining funds on living and unforeseen expenses.
Within the same time frame, however, she capitalized off of the career development programs Bell South offered retirees and secured credentials in cake decorating, bridal consulting and day care management for exploration. She also volunteered for her granddaughter’s school for one year and was eventually offered a paid position. George has since worked in the insurance industry.
Today, at 63-years-old, she’s the office manager for a Louisiana based home healthcare agency. Financially, she and her husband are surviving on a monthly basis with income from both of their jobs and social security. But she has no regrets.
“I wouldn’t do anything differently. Had it not been for 9/11, I would probably still be ok. I never intended not to go back to work at all. That [9/11] was an unforeseen something that was totally beyond our control,” she said.
George’s longtime friend and former co-worker, Laverne Johnson, 63, of Pearl River, La., retired from Bell South in 2007. The market was turbulent at the time, but she decided to make conservative investments in stock with the assistance of a financial advisor. By 2008, she, too, began to lose a couple of thousands monthly.
“She had me invested in some things that really had problems at the end of the year,” Johnson said of her advisor.
So Johnson pulled out of the market and worked with an insurance company to invest in an annuity. Though this route doesn’t guarantee a large return on investment, Johnson said she prefers being in control of her finances, which allows her to maintain a life of practicality, leisure and travel.
But she warns: “Retirement isn’t sitting back with your feet up and sipping coffee in the morning—not if you’re concerned about your financial well-being. You have to be aware and you have to gain some knowledge about what’s going on with your money—the money you’ve invested.”
On the topic of how women in general invest post retirement, experts say the data is limited and has to be inferred from what has been documented. That’s due in part to individuals’ reluctance to share information about their finances as well as the lack of funding to conduct such research, said Wilhelmina Leigh, Ph.D. and senior research associate in economic security for the Joint Center for Political and Economic Studies.
In 2009, the Joint Center polled 1,700 individuals in the National Opinion Poll about Social Security, Retirement Savings and the Economic Downturn. One specific question was designed to gauge how many respondents had consulted with a financial planner within the year prior to. According to the results, 16.4 percent of the 475 Black women polled and 15.9 percent of the 377 white women polled said they had consulted with a financial advisor.
A look at women-owned assets is another potential indicator of whether or not women are in a position to invest later in life.
Asset-wise, 61 percent of white women ages 65 and older receive income from assets as opposed to 29 percent of Black women and 32 percent of Hispanic women in that age bracket, according to Mariko Chang, Ph.D. and author of Shortchanged: Why Women Have Less Wealth and What Can Be Done About It. Among that demographic, the median earnings are $1,527 for white women, $292 for Black women and $543 for Hispanic women.
“What these numbers tell me is that minority women ages 65 and older are less likely to have assets that give them any income (such as stocks and bonds) and when they do own these types of assets, the value of the assets is far lower than the value owned by white women and men,” Chang said.
Similarly, women’s pre-retirement status is critical to their post-retirement viability. However, they face significant challenges with changing pension plans, caretaker responsibilities and fewer earnings—all of which steer their ability to save for retirement, according to Howard Rodgers a financial advisor in New Orleans.
“As a result, their retirement plan balances, social security benefits and pension benefits are often lower. To meet these financial challenges, they need to make retirement planning a priority,” said Rodgers, adding that, ultimately, each individual’s retirement experience will be unique.
This article was written as part of the MetLife Foundation Journalists in Aging Fellows Program organized by The Gerontological Society of America and New America Media and was originally published in the October 10, 2011 print edition of The Louisiana Weekly newspaper.