Hey Ladies, Want to Dance?

Retirement Three-Step

 Photo by   istolethetv

Photo by  istolethetv

“Let’s go boot scooting,” said one of my best friends as we discussed what we were going to do one Friday night back in college.

“Why?” I asked.

“Because ladies LOVE to dance!” he shot back as he stood up and pretended to do a two-step with an imaginary partner.

This particular friend was a good dancer and he always seemed to have success in meeting the opposite sex. Not only did we go dancing that night, but I signed up for lessons shortly thereafter, as did several of my other buddies.

This came to mind as I read a recent survey by the Transamerica Center for Retirement Studies and the Aegon Center for Longevity and Retirement. In this study, there were several data points that caught my eye.

·         81% of US homemakers are women

·         67% of homemakers are not prepared for retirement

·         89% lack a written retirement plan

It seems, as much as you ladies like dancing, you defer your retirement planning to your partner more often than not. With up to 50% of marriages ending prior to death and longevity statistics suggesting that women will outlive men by an average of almost five years, it is likely that most of you will find yourselves dancing alone at some point before the lights come on. Retirement planning may not be as much fun as a jitterbug, but it is too important not to learn even if you prefer to follow your partner for now.

So what can be done? Here are three steps (pun intended), and none of them require much more effort than an occasional night on the dance floor.

Don’t be a girl interrupted. If you are in a relationship that your partner earns most of the money and has the benefits, it’s important that you understand what those benefits are in case your life is interrupted. How many months of expenses are in your emergency fund, how much disability and life insurance you have, and beneficiary designations on retirement accounts and insurance policies are the first areas to focus on.

Learn as you go. Just as a couple of lessons can make one more willing to get out there and dance, it holds true for finances as well. One relatively easy step to take is to open a Spousal IRA (up to $6500 in 2015), which offers the same benefits as an account in the name of the working partner.

Take control of the entire process, from budgeting to fund the account, where you will open it, and what you will invest in. You will be in a much better state of mind to learn the inevitable lessons than after an unexpected separation or worse.

Diagram your steps. Insist on having a written financial plan. At a minimum, the plan should include a balance sheet detailing your assets and liabilities, a list of your goals, and where you stand in relation to accomplishing your objectives. For example, if junior is going to college in 3 years, estimate how much you need versus what you have earmarked for those costs.

Plans are not set in stone. They are just our best guesses and estimates given the information available today. At least once a year, you should sit down and review the plan and make any necessary revisions.

Let’s go ladies, it’s your lead!