Preparing for the Challenges Ahead: Retirement Planning Considerations for Women Doing It All

By, Lynn Ballou, CERTIFIED FINANCIAL PLANNER ™ and CFP Board of Standards Bay Area Ambassador

Now that the markets are recovering a bit, I’m hearing more and more that this generation is getting back to retirement planning, believing again that it just may happen for them! But retirement planning is not the straightforward process we might hope it to be. We need to marshal all our resources over a long period of time in the smartest fashion possible so that they last our entire life—whew!  And with many Americans no longer receiving guaranteed pension benefits alongside the fallout of more than a decade of volatile markets, even values in our self-funded 401(k) and other investment accounts are far below hoped for and needed levels. This presents a challenge for us all.

In my role as CERTIFIED FINANCIAL PLANNER™ I have been fortunate to work closely with many families in the Bay Area, especially women, helping them prepare for this exciting life transition. Most of us are fairly realistic about what we can look forward to in the way of income sources, but I see a lot of unrealistic planning involving the crucial details surrounding planning for retirement spending. Too many of us gloss over this and don’t spend time diving into the real categories that deserve substantial consideration. 

Here’s the theme that resonates:  as women, we don’t want to be a burden to our children. So, I want to share with you some of the less-commonly discussed but very important issues to consider when working on your own retirement preparation so that you don’t need to worry that you will become dependent on your children as you age.

INFLATION:  Easy to forget about because it’s so low right now!  But even so, some essential costs such as gasoline are maddeningly unpredictable.  Although you may own your home outright or have a fixed mortgage and think that inflation is something you can ignore, if you aren’t using a minimum of 2-3% in your planning, you should expect to encounter problems with your budget during years when you can’t easily afford to cut back.   Inflation won’t always be this low, and we that needs acknowledgement in a good plan.

MEDICAL COSTS: Women are particularly nervous about this important area of expense because we tend to be very loyal to our care providers.  We also do a good job of seeking out the types of care that frequently aren’t covered fully or often partially by even the best medical plans. To be able to stay with your favorite medical teams, you may need to pay more out of pocket as the years go on. There’s no guarantee that company or government provided medical insurance plans will be as robust in the future as they are now. Bottom line: build in extra for future medical costs, including the possibility of needing some type of long-term care, and give this category a much higher inflation planning rate than almost anything else. It’s not getting cheaper!

TRANSPORTATION: Women have a different type of love affair with their cars than men do.  We don’t necessarily need a sexy muscle car, but we do want a very comfortable, possibly chic or elegant, and always reliable vehicle that’s there for us without worry. That’s great—and maybe we enter retirement with the perfect car. But fast forward eight years or so, and this is no longer the right car—it needs work all the time, it’s not safe, it’s no longer comfortable let alone chic or elegant.  So, if you are retiring at 65, for example, you may need to buy another three or four cars in your lifetime. It’s essential that you build that into your future spending plans so that this cost doesn’t become an “oh no!” later on.

KEEPING UP THE HOME:  My husband finds it hilarious that every two years I replace all the towels in the house, but I care about the color coordination, the yummy plushness—ah, well, you get the point. And I am not alone, right ladies? We need to be sure that we have budgeted so that we will be able to replace things as they get old and raggedy, or when they just plain break (or when we just can’t stand them anymore and need a new color)! It’s so important to set up an allowance for annual replacement of refrigerators, heating systems, washers and dryers, and just the basic linens of life. If we don’t, we face a life-long struggle to keep up with the needs around the home, making trade-offs with other expenses instead of having enough to cover these costs seamlessly as they arise.

MAJOR HOME REPAIRS:  As much as I tease him about towels and the like, I am blessed that my husband has been a good sport about doing repairs around the house all these years.  But not only is his interest waning, so is his eye-sight!  Even if he continues to be a good sport, there’s no guarantee his body is going to love this in his golden years.  So, we’ll need to hire help, and we’ll want to hire good help.  When doing long-term planning, we need to acknowledge that roofs need to be replaced, plumbing comes under attack from age, roots and rodents, and even the house siding can become infested and need repairs or replacement.  Very few plan for this in their retirement budget.

As you can see, it’s not so much the obvious, pleasant things that escape our notice:  the desire for increasing our travel budget, the spoiling of our grandchildren and if we can afford to, the gifting of money to the next generation to help them out.  It is these unwelcome guests: the flooding of the basement, the electrical system upgrades, the exterior house painting.  Doing all you can to get your house in order, literally, before you retire is great, but we are living longer than previous generations.  We need to be prepared to have to do all these things again, possibly more than once, during our retirement years.  As women, this sounds just right—planning ahead, being ready for any challenge that comes our way. That’s how we roll!

Lynn Ballou is a CERTIFIED FINANCIAL PLANNER™ professional and co-owner of Ballou Plum Wealth Advisors, LLC a Registered Investment Advisory (RIA) firm in Lafayette, CA.  Lynn is also a Registered Principal and Branch Manager with LPL Financial (LPL).  As such, she is required by securities regulation to add the following information to this column:  The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendation for any individual.  Securities offered through LPL Financial, member FINRA/SIPC.  To see the list of states Lynn Ballou is registered in, please visit her website BallouPlum.