The Women’s Institute for a Secure Retirement works to provide low and moderate income women (aged 18 to 65) with basic financial information aimed at helping them take financial control over their lives and to increase awareness of the structural barriers that prevent women’s adequate participation in the nation’s retirement systems.
At the turn of every New Year, the internet is filled with lists of resolutions—ones that will help you get in shape, or improve your mood, or strengthen your relationships. Our favorite lists offer resolutions to help you get (or keep) your savings on track. The start of the year is a great time to set financial resolutions, and numerous websites offered great lists of financial goals for 2018. But much harder than setting the goals is actually keeping them. The former only takes a moment, the latter takes dedication and commitment, day after day, week after week. Commitment to resolutions tends to fade a few weeks into the year—people stop going to the gym, stop eating healthy, and, unfortunately, stop saving like they promised they would. Here’s our advice on not just the financial resolutions you should make, but how to keep them.
Keep track of your progress.
Many goals are unquantifiable, making it hard to know whether your efforts are worthwhile. That can prove to be an obstacle, but luckily, financial goals are easy to keep track of. Seeing the dollars rise in your account is a motivation to keep going. Downloading an app that tracks your savings can make this simple and will do all the calculations for you. Many banks and retirement plans offer them. Check out WISER’s blog post, “Save or spend? How apps can help you stay on track,” for a review of what’s available.
If a goal is proving too difficult, reassess it, rather than dropping it all together.
There is no shortage of recommendations for how much you should be saving. This financial new year’s resolutions list, for example, suggests that people save 15% of their gross incomes. If you make $60,000 a year that would be a savings goal of $750 per month. The percentage you should aim to save depends on a number of variables including your age and financial stability, but many people may find these goals hard to meet. WISER’s Seven Life-Defining Financial Decisions booklet offers advice on how to set the right goal for yourself. If you can’t save 15%, don’t get discouraged. Instead of keeping the number too high and continuously failing to meet it, try readjusting your goal until you reach a level that is doable and appropriate. This will likely stop you from throwing away the goal completely.
Work on one goal per month, rather than all of them at once.
Many use the start of a year as a time to set goals, but why not the start of the month? Rather than loading yourself up with ten new financial tasks all at once, try adding in one new goal per month, so that by the time the month is over and it’s time to add a new goal, the first has already become a habit. January is a great time to create a budget or review the one you have, and the start of each new month would offer a chance to reassess that budget and your spending and savings habits. WISER’s Budget worksheet is a great resource to help get you thinking about your monthly income and expenses. In February, make a commitment to prioritize your debts—meaning analyzing all the debt you have, and figuring out what is the priority to pay off, based off which has the highest interest rate. Continuing setting a new financial goal each month and watch your financial confidence grow!
Ask for help.
Finally, remember that although many see finances as something that is private, talking to family and friends about your goals can be extremely helpful. Finding a buddy who is also trying to save, or who can offer advice, will make it much more likely that you reach your goals.
November is National Family Caregivers Month—an annual event celebrated by WISER and partner organizations of family caregivers across the country. It’s a time to raise awareness of family caregiver issues, celebrate their efforts and increase support. This month’s theme “Caregiving Around the Clock” emphasizes that caregiving is a 24 hours a day, 7 days a week job.
Caregiving is a consuming role—physically, mentally and financially—yet many who take on the work don’t identify with the job or fully realize the toll it takes. Often, it comes on unexpectedly, and sometimes the responsibilities may be shared. For example, caring for an elderly parent might be divided between siblings or a paid worker. Still, even if you are doing the actual work of caregiving part-time or just a few hours a week, the effort affects every part of your life. It becomes something you have to think about and plan for around the clock.
The financial challenges of caregiving often come as a surprise to caregivers, as the day-to-day costs can really add up. Many smart retirement planners who believe that they have everything properly planned for are still often unprepared for the financial shock that caregiving for a family member can bring. Even if the role of caregiver comes unexpectedly, there are ways to keep your retirement savings on track while caring for others.
Create, and stick to, a household budget.
Caregiving can affect your daily and long term spending in unexpected ways. That’s why it’s important to create and follow a budget. If you already have one, adjust it to consider your new expenditures. You may also have a lower income if you decide to stop working or reduce your hours. While you’re at it, have financial conversations with the person you’re providing care for, too. It’s easy for costs to balloon, and when mental and physical capacities diminish, the elderly can also be at an increased risk for being victimized by financial scammers.
Try to avoid leaving your job.
It can be tempting (or in some cases a necessity) to run to a loved one’s side when they need care. Doing so, though, can be extremely harmful to your finances. Leaving your job will mean losing compensation and benefits, and maybe skills and contacts. If at all possible, try to exhaust all other options before leaving your job or see if you can at least work reduced hours instead of quitting entirely. If you have a retirement plan or pension through your employer, try to work at least as long as needed to be fully vested in your company’s retirement plan. If you are cutting back on hours, see if there is a minimum number of hours you can work to get reduced benefits.
Be smart about the financial support you provide your loved ones
Don’t drain your savings to help the person you are caring for financially. Usually, the major expense for older adults is health care. Drug plans run through Medicare and private companies may help cover the rising costs of medicine. Low-income seniors may also be eligible to receive help paying their premiums or for additional uncovered medical costs. Information about getting help paying for Medicare costs is available at Medicare.gov. The Eldercare Locator, a public service of the U.S. Administration on Aging is also a great resource for connecting with trusted resources in your community that can help with caregiving and other services for older adults and their families. Visit eldercare.gov or call 1-800-677-1116.
For more information and resources for managing your finances while caregiving, download WISER’s publication: Financial Steps for Caregivers. Included in the booklet is a budget worksheet that includes categories for caregiving costs.
On September 19, 2017, nearly 150 participants engaged on the issue WISER cares about most—women’s retirement security. The event was WISER’s 2017 Symposium: The Gender Story: A Symposium on Retirement Solutions for Women.
The event began with opening remarks by WISER’s president, Cindy Hounsell, who set the tone for the event. She noted that since its inception, WISER has been working to help women navigate their financial lives towards a secure and stable retirement, and while much progress has been made, there is still so much work to be done. Following Cindy’s remarks, a dialogue on the gender story began. Kerry Hannon, who also wrote about the event, is an author and financial journalist. She along with the two other panelists, Catherine Collinson from the Transamerica Center for Retirement Studies and Jennifer Putney from Portfolio Evaluations, emphasized the importance of helping women to become confident when it comes to money issues.
“Women have to get comfortable talking about money,” Putney said. “Talk about money with your friends. You don’t have to compare personal balance sheets, but you can talk conceptually.” Make a habit of it and planning for retirement will get easier.
After that dialogue which sett the stage for the rest of the day, four panels of presenters covered the following topics: “Research and Strategies,” “A Ripple Effect- Expanding Retirement Literacy & Retirement Income,” “Opportunities for Change?,” and a congressional panel of Capitol Hill staff who discussed the status of current retirement policies. In between, attendees heard a keynote address from Mary Lazare, the principal deputy administrator at the Administration for Community Living, within the U.S. Department of Health and Human Services. Lazare explained that even for her, the challenges of being a woman and saving for retirement have been immense. She told of becoming a single mother and the financial strain and worry that presented. But she also noted that savings can be transformative; once people start to save and see that savings grow, it can motivate them to keep going.
Some stark figures were shared during the event. Janice Co, from Prudential Retirement, revealed that even though women now make up about half of the workforce, their retirement balances are on average about a third of men’s. She referred to Prudential’s study on women and the retirement income gender gap. A comprehensive study on caregivers, presented by Collinson and her colleague at Transamerica, Hector De La Torre, discovered that caregivers who make $25,000 pay about $100 per month on caregiving—making it extremely difficult to save for the future. This new study was released the day of the event. Additional presenters shared some of the many resources available to help people navigate complicated systems like Medicare, (The Medicare Rights Center) and prevent financial fraud and abuse among seniors (EverSafe).
There are many things to think about as you approach retirement. Chief among them is how you will spend the money you have saved up. It is impossible to know how long your retirement savings will need to last, so it is important to be frugal. However, spending too little money can also be detrimental to your personal safety, health and happiness. Finding the right balance between over and under spending requires planning ahead and budgeting. One of the most important things to consider when doing so are the various costs you will have during retirement, including health care and housing.
When it comes to housing during retirement, there is a lot of discussion of “livability.” But what does livability really mean? For a retired person, it can mean a lot of things. AARP created a livability index that scores different zip codes based on categories that included: housing (affordability and access), neighborhood (access to life, work and play), transportation (safe and convenient options), environment (clean air and water), health (prevention, access and quality), engagement (civic and social involvement) and opportunity (inclusion and possibilities). All of these things are important to consider when making retirement housing decisions, but most important of all is overall affordability.
Many people plan to “age in place,” which means continuing to live in the same home until the end of life, but doing so can become extremely costly. Oftentimes, homes will have to be retrofitted and remodeled to make them easier to use. This may include a stair glide, an elevator, a walk in tub, shower seats, and widened doors. These costs can total tens of thousands of dollars. Additional costs of aging in place include home health care services, cleaning services and meal delivery. Make these considerations if you plan to age in place, and determine whether it is the best option. Oftentimes, it can be easier and more cost-effective to move out of a longtime home upon retirement.
There are many resources that can help you determine whether your best housing option in retirement is to age in place or move somewhere else, whether in your current area or somewhere totally new. The aforementioned AARP livability index provides helpful comparisons, as does Genworth Financial, which offers a tool that compares the average costs of home health care, adult day health care, assisted living facilities and nursing home care across states. Helpfully, it also allows calculation of future costs. Also take into account local tax laws when considering where to move—they can vary greatly and substantially impact how long your retirement savings can last. WISER’s fact sheets on long-term care are another useful resource for retirement housing budgeting.
June is Elder Abuse Awareness month, when organizations around the world focus their resources on spreading awareness of elder abuse and working to prevent it. Part of WISER’s missions is to protect older Americans from financial elder abuse.
One of the most common forms of elder abuse is financial elder abuse—when older people are taken advantage of financially. Scam artists prey on retirees who may have amassed large amounts of savings, but have dwindling mental faculties, meaning they are less likely to stop or report the crime. Although people often think of con men as smooth, fast-talking strangers, perpetrators are frequently family, friends or neighbors, who abuse the trust of the victim. Especially troubling, considering they are already at a disadvantage financially, is the fact that women are twice as likely as men to be the victims of senior financial abuse.
If you suspect that an older person in your life is being victimized by a financial scammer, it is important to take action immediately. If there is physical danger, call 911. If it is not an immediate emergency, contact your state’s Adult Protective Services.
Whether you suspect they may be a victim or not, it is important to talk to older people in your life about financial elder abuse. It can be challenging to do so because oftentimes, you may be talking to an authority figure or someone who is used to teaching you about things, not vice versa (for example, a parent). The best way to approach the difficult task is to divide it into three parts. First, present the facts. Second, listen to what they have to say. Third, make a plan. Most importantly of all, have the conversation as you would with a friend or peer. Talking down to older adults, as some are wont to do, can be insulting and cause people to tune out your advice, no matter how important or well-meaning it is.
1. Present the Facts
Explain how common elder abuse is: studies estimate annual financial loss nationwide to be around $2.9 billion. For that reason, it’s nothing to be ashamed of. It truly could happen to anyone. Most victims are between the ages of 80 and 89, live alone, and require some sort of help with either health care or home maintenance. Women are twice as likely as men to be victimized. The perpetrators are most frequently strangers (51% of the time), but it is also common for them to be family, friends or neighbors (34% of the time). For that reason, always be vigilant about giving away money, regardless of whom it is going to. Sixty percent of perpetrators are men. There are many different types of senior financial abuse, but the most common are telemarketing and internet fraud, identity theft and credit card fraud, the grandparent scam (pretending to be a grandchild in order to convince the senior to wire money), sweepstakes and lottery scams, and investment schemes and fraud. For more information on these types of scams and what they sound like, check out WISER’s fact sheet on the topic.
By first laying out out the facts in a non-judgmental tone, the older people in your life will understand and be prepared against future abuse, as well as able to consider whether they may potentially have been victimized already.
After making sure the older person in your life understands what financial abuse is, the next step is to listen. Who have they interacted with recently? Some people are embarrassed to admit they may have been scammed, so a kind, understanding ear is important.
3. Make a Plan
The third and final step is to make a plan to protect against future abuse. Think hard about who has access to financial accounts. Remember to never turn cash over to anyone– paying by check is safer because the payment can be traced. Remove your name from solicitation lists, and if someone comes to you asking for money or with an offer, say you need time to consider. For more tips, see WISER’s fact sheet on protecting your income.
May is Older Americans Month. Led by the Administration for Community Living and the Administration on Aging, WISER joins with organizations across the country to celebrate older Americans and their unique contributions to society. This month’s theme is Age Out Loud.
“Age Out Loud” means something different for everyone. For some, it might mean traveling to new countries upon retirement. For others, it might mean participating in social activities, like sports leagues, book clubs, or going out to dinner. It might mean spending quality time with loved ones, volunteering or engaging in community or civic events.
Regardless of how you define aging out loud, there is a common truth to doing so: you want options about how you’ll live, where you’ll live, who you’ll live with and what kind of care you’ll receive. You’ll want the freedom to make choices. Being able to choose what’s best for you in retirement requires planning ahead and saving.
If you are already retired, being able to age out loud in the future also means understanding your resources and how best to use them. First, take stock of your sources of income. Oftentimes, those include social security, defined benefit pensions plans, defined contribution retirement savings plans and/or personal savings, including Individual Retirement Accounts (IRAs) and non-tax-preferred savings and other assets.
Once you take stock of your sources of income and their values, consider your spending needs, and how they are likely to change as your retirement goes on. Take into account factors like inflation, taxes, your likelihood of living many years, how you plan to invest and spend your assets, and whether you plan to leave anything to your heirs. It is difficult to know how long your retirement will last, but there are predictions available based on how old you currently are. If you turned 65 in 2005, there is about a 50 percent chance that you will live until at least age 85. It is also difficult to know how much your medical care and insurance will cost during insurance. The federal Medicare program covers almost all Americans, but is unlikely to cover all of your medical needs.
Don’t just plan for the day you retire- plan for the days, months, years and even decades that may follow. Aging Out Loud, whatever that means to you, demands it.
“Financial Literacy” is a somewhat new term and trend in the United States, and for that reason, some find it off-putting and discouraging. Don’t let the fancy phrasing scare you, though. The reality is, financial literacy simply means knowledge about money and savings. Even though most of us didn’t learn the basics of financial knowledge in an educational setting (hopefully that will change in the future!), important, life-changing saving information is easily within reach.
In fact, understanding of the importance of financially literacy only became widespread in the past fifteen years or so. In 2002, the U.S. Department of Treasury created the Office of Financial Education as a way to organize its efforts in the area. The next year, Congress passed the Fair and Accurate Credit Transactions (FACT) Act, which established the Financial Literacy and Education Commission, a group that later published a “National Strategy on Financial Literacy.”
That means that, hopefully, financial education will become a standard and required part of education. However, just because it wasn’t something you learned about in school doesn’t mean you cannot become extremely knowledgeable on investing, saving, retirement and other financial topics. It is important for everyone to educate themselves about their finances, but know that you don’t need to be a financial expert to make smart decisions. Some basic information can go a long way.
In particular, it is important to know what you should be doing at every stage of life to make sure you are on track financially and preparing for long term financial security. WISER’s “7 Life Defining Financial Decisions” booklet breaks down key topics into stages and explains how to approach each one.
For example, when it comes to jobs and careers, when taking a job, consider not only salary but also benefits. There are two basic kinds of employer-sponsored pension plans: defined benefit and defined contribution plans. When leaving a job, it is important to consider that changing jobs, even for higher pay, can cost you a bundle in lost benefits and retirement income. If at some point in your life you decide to stay home full time, think through the family finances, including retirement planning. Where there are large upsides, you will lose compensation, benefits, job skills and contacts if you leave work completely.
The booklet offers more advice on financial decision-making at every stage of life. By focusing on life stages and basic information, financial literacy is within reach for everyone.
America Saves Week (February 27 – March 4, 2017) is an annual opportunity for individuals to assess their savings and take financial action. Each year, we and other organizations across the country encourage savers – or potential savers –to set a goal, make a plan, and save automatically.
America Saves Week is a time when everyone, no matter their income level, age, ethnicity, or gender can think about their savings habits. Even for those who already save, the week offers an opportunity to take stock of their savings, make sure they are on track and perhaps encourage others in their lives to save more.
This year, WISER is partnering with MANA, A National Latina Organization to highlight the importance of saving, particularly amount Latina caregivers. Caregivers are vulnerable to challenges when it comes to savings. Oftentimes, caregiving responsibilities cause caregivers to have to leave their workplace or reduce hours, and many pay out-of-pocket for caregiving costs which can impact their own future financial security. A MetLife study showed that caregivers lost $303,880 in wages, Social Security benefits, and private pensions over their lifetime as a result of caregiving responsibilities.[i]
For Latina caregivers, the challenges of caregiving are compounded by additional factors that make it all the more difficult, yet even more important to save. While many Americans struggle with long-term financial security, the wealth gap is especially pronounced for Latinas – wealth of the typical white household is 10 times that of the typical Hispanic household. Latinas earn $.55 for every dollar white, non-Hispanic men earn, and median wages for Latinas in the United States are $30,293 per year, compared to median compared to median wages of $55,470 annually for white, non-Hispanic men.[ii] Finally, Latinas live longer on average and therefore need more retirement income.
Saving can be difficult when it feels like your income is already being stretched too thin. But it is important to remember that you can start small, with small savings goals, and build on those savings over time. You might be surprised how quickly it can add up, which can provide additional motivation to save. This week, WISER encourages everyone to visit American Saves (www.americasaves.org) for savings tips, tools and resources. If you don’t have access to a retirement savings account through an employer, another great way to save is through the myRA; a savings account available through the U.S. Treasury. There is no cost to open a myRA and there are no fees. You can contribute any amount that fits your budget, even if it just a few dollars at a time. Learn more about this savings option at www.myra.gov.