By Contributor
msnbc.com
updated 11/9/2006 1:16:29 PM ET 2006-11-09T18:16:29

Despite becoming more active in their financial planning, American women still tend to take small steps toward ensuring a financially secure retirement.

According to Allstate’s sixth annual “Retirement Reality Check” survey, which measures Americans' attitudes toward and savings for retirement, almost half of women — 48 percent — have considered the financial implications of retiring alone, compared with 36 percent of men. Yet when asked who takes the lead in planning for retirement, 45 percent of women and 65 percent of men said the husband or male partner.

The majority of respondents said they are not set for retirement, although men feel a little more optimistic than women. Only 19 percent of women, compared to 23 percent of men, said they felt “very prepared.”

Because many marriages end in divorce and women outlive men by an average of five years, the Labor Department estimates that nearly 90 percent of women will end up managing their finances alone in the latter part of their lives. But even though women have gotten that message, the realization has not made them take better care of their own finances, according to the Allstate survey researchers.

“Women are educated, but they’re so busy they’re not taking the time to learn,” said Barbara Stanny, author of personal finance books for women such as "Prince Charming Isn’t Coming" and "Overcoming Underearning." “It’s due to resistance and a lack of education on the topic, so when they actually do face their finances, it all looks so complicated, and they get overwhelmed.”

'Don’t worry' is not good advice
The disconnect between men and women’s views on finances is mostly due to gender differences from childhood, said Stanny. “In my experience, men were raised to be financially successful, and women were raised to be financially dependent.”

Stanny, who came from a wealthy family, remembered her father’s only financial advice to her was, “Don’t worry.” She married a financial adviser who turned out to be a compulsive gambler, and even though she knew about his problem, she let him manage their finances. After he had lost millions and piled on debt, Stanny asked for a divorce and, in her 40s, started learning how to manage her own money.

“Women typically don’t get serious about managing money until they hit a crisis, like when they’re on the verge of retirement, and that is the worst time to start.”

Financial empowerment leads to higher self-esteem, and more women, especially baby boomers, are realizing that fact, said Cindy Hounsell, president of Women’s Institute for a Secure Retirement. The institute was founded by multimillionaire philanthropist Teresa Heinz, the wife of Sen. John Kerry, to help low– and moderate-income women become more knowledgeable about their finances.

"What I’ve seen of my married friends is as their kids have left the nest and they’ve gone back to work, they have also become more confident in their finances and now believe themselves to be financially savvy women," said Hounsell.

Hounsell, who is 60, divorced, and still worries about her retirement finances, said younger women in their 20s and 30s should really be boning up on their financial knowledge.

"Generation Xers in particular are not addressing finances, and this is the time when they should be. When I talk to young married women, they either say neither spouse is doing anything or it’s hit and miss, like they’re focusing on the kid’s college funds instead of their own retirement."

The Allstate survey found that many couples think "a simple conversation" is all that is needed to get their partner to take a specific action regarding saving for retirement. But planning for the long-term takes more than just a few minutes worth of talk.

"Money is a delicate issue in marriage, and conversations about it tend to be charged," said Stanny, adding that women fear upsetting their spouses, or they don’t know what to ask because they feel undereducated. "These are long, hard conversations, but they are needed."

A safe way to kick off the conversation is starting with a broad and neutral topic, such as reviewing life insurance coverage or employee benefits. Starting with one issue at a time is less overwhelming.

"Spouses should start by asking themselves simple questions," said Hounsell. "For instance, 'Are we going to stay in this house for a while?' [and] ‘If so, will we do more to pay off the loan?'"

Eventually, couples need to sit down and review all their financial statements together, said Stanny. "You both need to be up to speed about where your money is and how it’s working for you. You also need to determine your goals for retirement, your values and whether your money is going to get you what you want."

Because lifestyle is the driver of retirement expenses, any conversation ultimately needs to determine how a couple wants to live. Differences of opinion need to be addressed before it's possible to budget accurately. Couples also need to talk about what tradeoffs are acceptable, both short- and long-term, to ensure there is enough for the retirement nest egg.

"The upside of this heavy talk is that you’ll be more financially savvy," said Hounsell. "And if you decide to go to a financial planner for more help, you’ll need to be financially savvy anyway so you understand that person’s advice and the fees that come with it."

Women on the verge
Another outcome is that many women may feel they need to manage money of their own outside the joint checking account. The Allstate survey found that 49 percent of women said they invest money separately from their spouse or partner. And 42 percent of women maintain a separate savings account, compared with 28 percent of male respondents.

Is that sneaky? Stanny doesn’t think so. "I think it’s sad if couples don’t talk about money and that lack of communication leads women to put money in their own name. But it’s more sad if the husband dies and the wife never had any credit or money in her own name and now doesn’t know what to do. If you’re not asking questions and just trusting your spouse with everything, too many surprises can come up if something bad happens to your spouse."

Hounsell agrees a woman’s separate account is a good idea but still, she said, "He should know about it just in case something bad happens to you."

Both also agree that financial education can be easy and fun if taken in manageable chunks. Stanny advises women to take three steps on a daily, weekly and monthly basis.

"Every day, read something about money, even the business headlines in a newspaper, to familiarize yourself with financial jargon and trends. Every week, have a conversation about money, especially with those who know more. Every month, move some money into your savings or money market account."

Because women generally tend to ask others for advice and prefer social interaction more than men do, joining a financially-focused group such as an investment club, money study group or money book group may be a more interesting way to learn than on one’s own.

"When women realize it’s fun to learn about these matters in a group and then understanding and participating, it really is an empowering feeling for them," said Stanny. "It’s secrecy and silence about money that can keep women stuck."

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