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5 Things You Can Do Now To Improve Your Financial Security For Retirement

July 13, 2009 on 11:45 am | In Baby Boomers, Financial Advice for Women | 2 Comments

If you’re anything like most people I know, you’ve struggled and worked hard to build up your retirement nest egg over the years, only to see much of it melt away because of inept fools in Washington, greedy idiots on Wall Street, and self-serving advice from so-called “expert advisers.” It’s truly sickening.

And that’s why I wrote a Special Report devoted to advise especially Baby Boomer women, and I’m publishing it here in 5 parts, beginning with this blog post you’re reading today.

It’s become very clear to me that virtually no one out there knows what to advise you to do in today’s troubled financial world. I watch the financial shows, and read everything I can get my hands on. There are lots of people promoting financial solutions, but once you get behind the headline, there’s really no beef there. Almost no one’s giving you the kind of specific, meaningful, hands-on advice you need, to get yourself back on solid footing and protect yourself and your future against further woes in this turbulent economy.

Americans have recently lost over $2 trillion in their retirement portfolios, and at least $2 trillion in the value of their homes, and Baby Boomer women who are over 50 are especially affected by this economic meltdown. Since tens of millions of us boomers are rapidly approaching retirement age, we have less time to restore our dwindled bank accounts and achieve lasting financial security-and most of us sure don’t want to take big risks at this stage of the game! Understandably, many women boomers worry about making a financial mistake.

Yet there are dozens of safe, smart, prudent, and wealth-building steps you can take today to improve your financial status without increasing your risk. My staff and I at the Baby Boomers Retirement Network (BBRN) spend most of our time interviewing handpicked experts to uncover, research, and fact check these smart moves. We make sure that if you follow our advice, you will end up ahead of the game. When you become a member of the Network, every month you’ll receive insights, tips and strategies that can change the path of your life forever.

So when you read these “5 Things Every Woman Over 50 Needs to Know NOW About Creating Financial Security For Retirement” please know these are just the tip of the iceberg of the steps we will recommend to you. But they’re a great beginning, and I recommend you start on them immediately.

Here are five smart things you can start doing right now to rebuild your investments, improve your enjoyment of life, and weather these economic storms:

1. Revisit and investigate all the investment options offered in your 401(k) plan.

Did you know that women invest differently than men?

The Wall Street Journal recently reported on the difference between women and men as investors, pointing out how different things might be if the financial world were female. [1]

According to WSJ.com, “Finance professors Brad Barber and Terrance Odean have found that women’s risk-adjusted returns beat those of men by an average of about one percentage point annually. In short, women trade less frequently, hold less volatile portfolios and expect lower returns than men do.

For the male investor world, says WSJ, “The long term is somebody else’s problem, and asking for advice is an admission of inferiority. Worrying about risk is for sissies. Leverage is good, since it raises returns-while the market goes up. Is it any wonder the male-dominated world of Wall Street has boomed and busted every few years for more than two centuries?

“Women, by contrast, put safety first. Even after controlling for age, income and marital status, women are more inclined than men to wear seat belts, avoid cigarette smoking, floss and brush their teeth and get their blood pressure checked. They even have been shown to be 40% less prone than men to run yellow traffic lights.

“Women are less afflicted than men by overconfidence, or the delusion that they know more than they really do. And they’re more likely than men to attribute success to factors outside themselves, like luck or fate.

“In 2001, a survey of financial analysts and investment advisers found that women felt it was much more important than men did to avoid incurring large losses, falling below a target rate of return and acting on incomplete information. In short, women are more risk-averse than men. And they shy away from uncertainty: Asked whether having ambiguous information would reduce their confidence and raise their perception of risk, 92% of the women said yes, versus just 69% of the men.

“‘There’s a general emotional difference between men and women as they perceive and take risks,’ said Jennifer Lerner, a psychologist at Harvard University’s John F. Kennedy School of Government.

“Negative events like natural disasters, terrorist attacks or a financial crisis usually make men more angry than fearful. Women, on the other hand, tend to feel more fearful than angry.

“Those differing emotions lead to divergent viewpoints. Seen through what Prof. Lerner calls ‘a lens of anger,’ the world seems more certain, more amenable to our control and less risky. Viewed through a lens of fear, however, the world appears full of uncertainty, beyond our control and rife with risk.

“The results of a nationwide survey of hundreds of investors conducted in March [2009], just days after the Dow bottomed at 6547, show how anger and fear in the minds of men and women can affect their financial decisions. Men were far more likely than women to say they were ‘more angry than fearful’ about the financial crisis. And one in eight men, but only one in every 40 women, had ‘made riskier investments looking for long-term growth’ in the previous week. Female investors were twice as likely to expect the return on stocks over the coming year to be zero or negative and to think stocks will return 5% or less per year over the next 10 years.

“‘The women were more concerned but took fewer actions,’ said psychologist Ellen Peters of the University of Oregon, who co-directed the survey. ‘They were also more pessimistic-or realistic?-about what to expect from the market.’

Stocks are up 35% since March [2009], so the women’s fears haven’t yet come to pass. But their inaction already looks wise. And their realism can’t hurt, either. ‘The essential traits and qualities of the male,’ H.L. Mencken once wrote, ‘are at the same time the hall-marks of the numskull. … Women, in fact, are the supreme realists of the race.’

“Memo to men: Your household’s investment portfolio will be less risky and more diversified if your wife helps manage it. She will share in what comes out of that portfolio down the road; shouldn’t she share in what goes into it? Chances are, her ideas and emotions will complement yours, and you will both end up wealthier.”
Source: WSJ.com May 9, 2009

What You Should Do NOW

You should re-balance your investment allocations and expand into investments that will preserve asset value in 2009. Make sure no one industry, business sector, geography, company size, or type of investment amounts to more than 20% of your portfolio. (For example, you can divide up your money between a money market fund, bond fund, global large cap fund, commodities fund, and an emerging markets fund). Compare fund management fees carefully, and choose exchange-traded funds (ETF’s) or mutual funds with low fees where available-some charge only one-third what others do for the same service. Remember, these fees come off your annual return (or make losses in the market hurt even more!). If your 401(k) offers only limited options, see if you can arrange to make this concern known to the senior Human Resources executive at your employer, or even the CEO, and request a broader selection of investment options.

Also, think three times about staying invested in your company’s own stock if it is offered in their 401(k) plan-and remember, in no case keep more than 20% tied up in any one company’s stock. Finally, make sure you put in enough money in 2009 to get 100% of the matching funds offered by your employer (if any). If you are over 50, you should be eligible to make additional catch-up payments-take advantage.

Tomorrow come back for my next post where I will discuss action step # 2.

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[1] Source: WSJ.com, The Intelligent Investor, “For Mother’s Day Give Her Reigns to the Portfolio”,
May 9, 2009