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In Retirement Planning, Women Face Different Challenges Than Men

By Rachel Monroe

High-net-worth women can take steps to manage the unique issues they face when it comes to preparing for their later years.

The road to retirement is a winding one. That's especially true for affluent women, who face unique challenges compared to their male counterparts when it comes to preparing for their golden years. In order to ensure a long and happy future, high-net-worth women need to take a number of factors into account as they plan ahead.

Longer lifespans require proactive investment

Across the globe, women tend to live longer than men. A 60-year-old woman can expect to live an average of 21.5 more years, while men's global life expectancy at 60 is 18.5 years, according to statistics recently released by the World Health Organization. Recent research by the Brookings Institution confirms that the average life expectancy of the wealthiest 10 percent of women at age 55 is also superior to men from the same cohort.

While longer lifespans mean more time to spend with family and friends, living longer means women need more resources in retirement, which means taking a proactive view of their investment portfolios.

The good news is that high-net-worth women are already actively diversifying their investments – a 2013 survey from MainStay Investments in the U.S., for example, found that high-net-worth women allocate on average 27 percent of their portfolio to alternative investments, while men allocated an average of 20 percent, and 27 percent of women surveyed also said that they planned to allocate more funds to alternative assets over the next five years.

Women also need to ensure they have the right mix of growth, income-producing and capital preservation assets that will last a lifetime. "Investment choices certainly matter to everyone, but when you consider that women will on average live longer than men, and will have more elderly years with larger healthcare expenses, that becomes even more critical," says Donette Stubblefield, chief fiduciary officer and director of fiduciary risk for global wealth at BBVA Compass. "Invest early and consistently, consider automatic annual increases in your investment amounts and take advantage of automatic rebalancing."

Estate Planning

Women's longer lifespans also mean that they're more likely to outlive their partners. In order to protect themselves and their children, women and their partners should jointly consult with financial professionals to develop an estate plan that minimizes the impact of estate taxes, capital gains taxes, and any other death duties, and ensures they'll have adequate resources in the event that they are widowed.

"Sometimes we're reluctant to discuss estate planning, but it is critical that we do so, so that the appropriate people are taken care of," Stubblefield says. "A successful estate plan will ensure that assets have proper control, they are conserved with minimal tax implications, and survivors have income and appropriate liquidity."

Women should also research the qualification criteria for any spousal benefits they hope to receive. Some benefits may have clauses disqualifying spouses from receiving benefits if they remarry, for example. "Above all, don't be afraid to ask questions and educate yourself," Stubblefield says.

By doing so, women will be better prepared to take control of their financial futures and work toward long and happy retirements.

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