Do Rich Women Fear Retirement?

According to a recent study by The Hartford Financial Services Group, women fear three things about retiring. They fear inflation, health and longevity. The study of 1,194 adult women between the ages of 45 and 74

“They have reason to be nervous. Women work 12 fewer years than men on average, have less put away for retirement and face high odds of a long life spent alone.” said Stephanie Chappell, The Hartford’s corporate gerontologist,

At the top of the list of fears was the fear if inflation. Of the women surveyed, 83% said that they feared that their purchasing power would dwindle due to inflation, compared with 69% of men. Smart women! Since the generally accepted rate of inflation runs between 3% and 4%, its realistic to see that your purchasing power will drop by over 60% in the next 20 years. Mind you that doesn’t factor in if we end up in a period of runaway inflation. Hmmm, could our current $4+ a gallon of gas and skyrocketing cost of food by a sign of high inflation. Well not if you listen to the government, but then the government is good at lying to us so don’t take them at face value.

If you read the news paper or watch the news you may hear some talk about the CPI (Consumer Price Index) The CPI is used by the government to assess where inflation.

The CPI was developed in the 1920s to monitor the cost of goods and services. During the Carter administration, the decision was made to remove high-cost items like food and fuel prices that would drive the CPI higher. Since the 70’s were a time of soaring inflation (stagflation actually) it’s not hard to figure out why the did this. I don’t know about you, but when food and fuel go up in prices, I feel it right away. So I’d say it’s a very relevant measure of TRUE inflation and to ignore it is an insult to our intelligence.

When the Federal Reserve sets interest rates, it bases interest rates on the core inflation rate; in other words, inflation without including the cost of food and fuel. Which is why they should have been raising rates recently as opposed to cutting them (but that’s a conversation for another time).

According to the Forbes “Investopedia,” core inflation excludes items such as food and energy because food and energy “face volatile price movements.” Sounds rather disingenuous doesn’t it?

In other words, since food and energy prices can spike upwards, as they have this year, the Bureau of Labor Statistics calculates “core inflation” without food and energy prices, under the rationale that food and energy price spikes are merely temporary price shocks that would distort the measurement of underlying long-term inflation. Unfortunately, in the real world the cost of food and fuel can’t merely be swept under the rug by those of us that actually by food and fuel!

If you’re a wealthy women that’s just started thinking about about your retirement, please keep inflation in mind through out the entire process of planning the retirement of your dreams.

75% of polled women saying that they were “very” or “somewhat” concerned with “declining health.” Over half of all bankruptcies occur as a result of someone that is blind sided with crushing medical bills that they were either not covered for or vastly under insured.

Add the rising cost of health care to fears of poor health, and 87% of the women expressed nervousness concerning retirement.

Sixty-four percent of the women said they were also worried about living too long, compared with 46% of men. Considering that the average women is widowed at a young 56 years of age, this is a very valid concern.

As I’ve mentioned before, women have a tendency to be too cautious when it comes to their investment choices and should be moved away from being “ultraconservative” investors to help build a realistic retirement that will stand the test of time.

Looking into Long Term Care (LTC) and disability insurance would be a very prudent thing to do.