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Targeting Desired Retirement Outcomes for Women

The female investor’s strategy for retirement planning | May 2016


This paper looks at the challenges that Americans – and women in particular – face in saving for retirement. It also presents principles for successfully achieving targeted retirement outcomes, designing budgets, prioritizing goals and investing with purpose for a more secure retirement.

Retirement Success Begins with Targeting a Desired Outcome

BNY Mellon Retirement defines a successful retirement outcome as achieving income sufficient to sustain and protect one’s desired retirement lifestyle plus legacy goals. For many, this means having the financial security and ability in retirement to:

  • Meet day-to-day living expenses
  • Make personal lifestyle choices about where and how to live, and to be able to enjoy hobbies and personal pursuits
  • Maintain quality of life, personal health and independence
  • Leave residual assets for heirs and achieve philanthropic goals

Retirement is a journey, not a destination. How individuals live today dictates how they will live in retirement, and experience confirms that having a financial plan leads to a more confident financial future. We believe by focusing on four fundamental interconnected financial behaviors (Earning, Spending, Investing and Insuring), and with the help of a financial advisor, individuals are better able to achieve their desired retirement outcomes.

Targeted Outcomes - Earnings Spending Investing and Insuring

This “four behaviors concept” is beautiful in its simplicity. For the most part, individuals know they must earn income in order to spend. And they must spend in order to provide for their needs and wants. What they are less familiar with is the extent to which they must invest prudently in order to spend more and work less in the future, and their need to insure their earnings, assets and health against unforeseen events that could derail their retirement plans. It is through professional advice that female investors can appreciate the interplay of these four behaviors and take action to holistically manage them.

The State of Retirement in America


of all working-age households and 41% of near-retirement households do not own any assets in a retirement account.4


of those receiving Social Security benefits today, derive 90% of their income from this one source.5


rely on Social Security
as their only source
of income.6


of all retirees have little to no income outside of Social Security during a time when lifespans are longer and healthcare costs are rising.7

Where Do Americans Stand with Their Retirement Savings Today?

A significant portion of the American workforce has zero savings for retirement. Many have little to no income outside of Social Security, which clearly is an unreliable source based on the sustainability issues it faces. The need for professional guidance becomes clear in order for individuals to achieve their targeted retirement outcomes. Read more from The State of Retirement in America (PDF - 1.1 MB).

The State of Retirement for Women

Women represent a rising force in America, a virtual powerhouse of economic might. They serve as primary breadwinners in a growing number of homes, earn the most college degrees, represent the majority of the workforce, and will soon influence two-thirds of the nation’s wealth. And yet, their ability to achieve their targeted retirement outcomes lags significantly behind men. This is true for a number of reasons, from lower wages to fewer years in the workforce to fewer contributions to employer-sponsored savings plans.

Because women assume the lion’s share of parenting and caregiving roles, and often stop working to care for an ill spouse or aging parent, their earnings and savings are directly affected. On average, women work 12 years less than men do throughout the course of their careers,8 and those are often the years of greatest earnings potential. Female workers are also more likely to work part-time, and the majority of those jobs do not offer employer-sponsored retirement benefits.

Fewer years on the job and lower wages means less income, fewer contributions to retirement plans and less lifetime savings upon entering retirement. Women also typically receive thousands of dollars less annually than men from their Social Security benefits. Again, this is the result of lower wages gained over their lifetimes, and reflects an outdated Social Security system that was designed to support married heterosexual couples where one spouse was the breadwinner.

The irony is that women live longer and, therefore, require greater assets than men to help ensure a comfortable retirement. But with the right financial plan and advisor, women have the ability to avoid a future with less than- adequate retirement savings. The following outlines the BNY Mellon Retirement approach to saving for retirement and to helping women – with the guidance of a financial advisor – take control of their financial lives. Read more from The State of Retirement for Women (PDF - 1.1 MB).

Retirement Challenges are Compounded for Women

All Americans are facing sizable challenges as they prepare for retirement, but the difficulties are further compounded for women. As caregivers for the family, as the ones most likely to be widowed, as the ones responsible for their own long-term care, women have critical planning and investment needs that often extend beyond those of men.

Additionally, women are more likely than men to underestimate their own financial knowledge. Sixty percent of surveyed men rank themselves as very knowledgeable or somewhat knowledgeable about personal finance, compared to just 48% of women.9

For all the confidence women have in their abilities to meet job expectations, address life responsibilities and manage household finances, they often lack confidence in their ability to plan and invest for the future and will refrain from engaging fully in the management of their money.

BNY Mellon Retirement believes that the expert guidance from a financial advisor can be key to helping female investors take charge of their financial futures and meet their considerable retirement challenges. Working together, female investors can better achieve a lifetime of goals. Read more from Retirement Challenges are Compounded for Women (PDF - 1.1 MB).

The Good News: Retirement Success Can be Achieved

Reverse Planning – The Financial GPS to Retirement

Once a targeted retirement outcome has been established, the next step for financial advisors is to help their female clients design a budget, or a financial GPS, that maps out a clear route to wealth building and desired retirement outcomes. One of the most effective methods advisors can use is reverse planning, which starts with the retirement outcome and then builds a budget by working backwards.

Reverse planning quantifies the cost of retirement in terms of annual expenses, then projects them over the client’s retirement life expectancy, and solves for the gap between retirement income and expenses.

Female investors can work with a financial advisor to first calculate what retirement will cost initially and annually.

An advisor can help determine what guaranteed sources of income can be expected from Social Security, pensions and annuities, and can subtract the guaranteed annual income from the expenses to calculate the funding gap. The advisor then can estimate the value of assets that would be necessary to help generate sustainable income to close the gap. That asset value is the target necessary to achieve the desired retirement outcome. Read more from Retirement Success Can be Achieved (PDF - 1.1 MB).

Establishing and Maintaining Financial Balance

Prioritizing short- and long-term financial goals is critical to establishing and maintaining the balance between earning, spending, investing and insuring. Every female investor has a unique life, with her own needs, goals and lifestyle choices, along with unforeseeable events that can shape and alter her journey to retirement.


1 Federal Reserve Bank of St. Louis. “Housing Rebound Broadens the Wealth Recovery but Much More is Needed,” November 1, 2013.

2 “Average Americans Still Have Not Recovered from Crash, but the Wealthy Are Flourishing,” May 11, 2013.

3 2012 OASDI Trustee Report, Table IV.B2. www.ssa.gov. Accessed May 21, 2012.

4 The Center for Retirement Research at Boston College. “401(k)/IRA Holdings in 2013: An Update from the SCF” by Alicia H. Munnell, 2015.

5 The National Institute on Retirement Security. “The Continuing Retirement Savings Crisis” by Nari Rhee, Ph.D., and Ilana Boivie, March 2015.

6 Social Security Administration. “Income of the Population 55 or Older, 2012,” April 2014.

7 Social Security Administration. Fact Sheet, November 2015.

8 AARP Public Policy Institute.

9 Chen and Volpe, Gender Differences in Personal Financial Literacy.

This information is general in nature and not intended to constitute tax or estate-planning advice. Please consult your tax or estate-planning advisor for more detailed information on these issues and advice on your specific situation.

BNY Mellon Retirement personnel act as licensed representatives of MBSC Securities Corporation (a registered broker-dealer) to offer securities, and act as officers of The Bank of New York Mellon (a New York chartered bank) to offer bank-maintained collective investment funds as well as to offer separate accounts managed by BNY Mellon Investment Management firms. This material is not intended as an offer to sell or a solicitation of an offer to buy any security, and it is not provided as a sales or advertising communication and does not constitute investment advice. MBSC Securities Corporation, a registered broker-dealer, FINRA member and wholly owned subsidiary of The Bank of New York Mellon Corporation, has entered into agreements to offer securities in the U.S. on behalf of certain BNY Mellon Investment Management firms.

BNY Mellon Investment Management is one of the world’s leading investment management organizations, and one of the top U.S. wealth managers, encompassing BNY Mellon’s affiliated investment management firms, wealth management service and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation.

© 2016 MBSC Securities Corporation, Distributor, Member FINRA