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Written by: Melissa Brandt
When it comes to women and investing, it’s a topic that is near and dear to my heart. Throughout my life, I have had very close relationships with my mom, grandmother and great-grandmother, which also means I have witnessed some of the challenges that can hit women especially hard. And it’s why I’m proud to work for a company that helps bring confidence and financial independence to so many women.
It’s important to think through the unique needs of your female clients from a practice management aspect. According to the Alliance for Lifetime Income: “Women control a third of total U.S. household financial assets today — more than $10 trillion — and $30 trillion more is expected to shift into the hands of U.S. women over the next three to five years…The economic strength of women in our country today is profound, but that doesn’t mean they don’t want advice.”
Women certainly want your help; among both young professionals and the affluent, the most important attribute they value in a financial professional is a willingness to educate and explain.1 Here are three important areas where you can assist them.
1. Help them understand and mitigate risk
Risk comes in myriad forms when it comes to investing — and no one has a crystal ball to tell if you’re too aggressive, not aggressive enough, if you should seek out perceived “safety” or swing from the chandeliers with international small cap.
What we once thought of as the “silent killer” of portfolios has been playing a starring role in the headlines recently. The Alliance has found that women are keeping a close eye on inflation: “Inflation risk is the top financial concern for nearly three in four women. Only two in five women (41%) say they know how to protect themselves from inflation.” LIMRA concurs, with inflation being a major concern for 60%-65% of women, across all categories.2
Many investors are shaken by what they are seeing in the news, according to recent Lincoln Financial Group research.3 If your clients are concerned about what they’re hearing in the news, the impact of inflation on retirement income plans is an important and timely conversation.
Sometimes you need to educate them on risks that they might not want to think about. One example is long-term care. It’s not an easy discussion. But you can help them catch potential problems before they happen. For instance, sometimes long-term care assets may be consumed completely by a husband who is older or — as commonly happens — passes first. It’s also important to note that women make up 66% of long-term care givers, which can create an additional financial burden on them. In either case, this can leave the wife with less protection — or completely unprotected—years down the road.
How many years down the road? Well, that leads us to another unique challenge for women.
2. Plan for age 100 — and beyond
Americans are living longer than ever before. It’s definitely a cause for celebration! But it also requires careful long-term planning, especially for women, with a post-Covid life expectancy of just over 80 years, 5.3 years longer than men, according to the CDC (download the pdf).
Keep in mind, 80 years is just the average. Our mortality is not a pleasant thing to think about, so there is a temptation to think, “I just need to prepare for 15 or 20 years.” But while the average woman — the one in the spreadsheets — will theoretically spend 15 years or more in retirement, real-life women may have far different outcomes.
It’s becoming increasingly important to plan to live to 100. You need to work with your clients on a strong plan designed to go the distance.
Boston University School of Medicine oversees the “New England Centenarian Study,” which has yielded some fascinating stats that have a direct impact on income plans:
- In 2021, there were 89,739 centenarians — and 85% are female!
- The number has nearly doubled in the past 20 years and continues to increase.
- What’s especially interesting is the theory that, while good lifestyle practices may help you live into your late 80s, there seems to be a genetic component for centenarians.
Here’s some discussion points for your female clients: Do they engage in healthy habits that can lead to a long life, and do they have family members who have lived particularly long lives? Most importantly, what’s the plan to address many potential years in retirement?
3. Structure an income stream that can go the distance
How long will a given person live? It’s a question that’s impossible to answer. Regardless, you need to discuss with your clients the importance of income that will last their full lifetime.
Women who work with a financial professional have a head start in planning. According to a new LIMRA study, “[advised] women are more likely to estimate how many years their assets and investments will last in retirement (50% [advised] vs. 36% [not advised]) and develop a specific strategy or plan for generating income from retirement savings (37% vs. 22%).” While advice makes a significant difference, it’s worth making sure that 100% of your female clients can answer “yes, I have discussed these very important topics with my financial professional.”
In the same study, LIMRA found that women are also becoming much more interested in guaranteed lifetime income; their interest has increased 63% over the past five years; last year, as fears of inflation and economic uncertainty spiked, the level of interest jumped significantly.
The danger is, are they sacrificing long-term growth for short-term safety? And if so, how can they hope to keep pace with inflation, let alone grow their assets? The Alliance states, “An overwhelming 83 percent…of working women would choose a portfolio with reliable retirement income over a risky portfolio with potential for higher returns — jumping even higher, to 88 percent…among Baby Boomers.” Unfortunately, according to the Alliance, less than half of women (47%) know how to make their money last through retirement.
Keep your female clients focused and confident
Women are working to strike the right balance to make their savings last through retirement. But the inherent volatility and uncertainties in planning have shaken their confidence. The good news is, just discussing a plan and analyzing relevant risks means that your female clients will be better informed and prepared for their long-term goals. One great place to start is with our highly regarded, broad annuity portfolio. Lincoln Financial has been around for 118 years. We’re always pleased to help you develop a plan designed to stand the test of time and help take women to 100 years and beyond.
Partner with us: As always, if you have any questions, please contact your Lincoln representative today at 877-533-0265. And follow us on LinkedIn for regular insights and tips on retirement income planning conversations.
Related: Syncing up Retirement Income With Spending
1LIMRA, "What Women Want in Financial Services," pgs. 23 and 36, 2022.
2LIMRA, "What Women Want in Financial Services," pgs. 14, 27, 41, and 68, 2022.
3Lincoln Financial Group, “Perspectives on Retirement Preparedness,” 2023.
Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates, including broker-dealer/distributor Lincoln Financial Distributors, Inc., Radnor, PA, and insurance company affiliates The Lincoln National Life Insurance Company, Fort Wayne, IN, and Lincoln Life & Annuity Company of New York, Syracuse, NY. Affiliates are separately responsible for their own financial and contractual obligations.