The 3 Critical Questions Women Should Be Asking About Their Retirement
Hey, I'm Danny Rondberg from The Retirement Research Foundation. Today I'm doing a video on the three questions women need to be asking about their retirement. Welcome back. Thank you so much for joining me. I want to talk about the number ... The three top questions that women need to be asking about their retirement that is so important. I travel the country and speak to insurance agents and financial advisors. I also speak to clients and do a lot of different educational workshops, and I swear this happens every single time. Some sweet little 80 year old something lady walks up to me and goes, "My husband passed away. The pension stopped, the company went broke. The life insurance was canceled. I only get social security. I'm barely surviving. I have to move in with my ..." It happens over and over and over again. It's so sad and it shouldn't be the way we take care of the women in this country.
Now again, are women making more money than ever? Absolutely. Are wage statistics still fair in this country? Absolutely not. Look at the scenario that happened with the famous actor and actress where they both got, I won't say their names, but they both got called in to do a re-shoot and the actor got paid like 1.5 million and she got paid the daily wage of like 90 bucks an hour or something. Just unfair, right?
But women are in the workforce. They're making more money than ever, okay. But the reason why the famous economist, Tom Hegna says that retirement and life insurance is a women's issue is because women live longer typically. Typically, not always, women usually marry an older men, and women usually live longer than that man. So again, they're going to be the survivor of the consequence of whatever they did together as a couple will be her lifestyle and retirement.
So the three questions you have to ask is, number one, "What will my income be?" That's so important. Now, when you have a man and a wife, or a two spouses and social security, okay? One spouse passes away. Which social security benefit does the surviving spouse get? They get the higher of the two, whether it's the man or the wife, doesn't matter if it's the man's benefits are higher, the woman's benefits that's higher. Whatever benefit is higher, that's what the surviving spouse is going to get. We want to know what that's going to be.
Now, if there's a pension, we want to know which pension option they selected and what the surviving spouse's pension is going to be. You could flip all this around. If the man was a surviving spouse and the woman was the breadwinner, please. I'm not trying to be talking about different gender specific, you know what I'm trying to say?
If I'm trying to say that woman makes more than man, or man makes more than woman, I'm not going into that issue, right? I'm talking about and trying to be politically correct saying, "Let's just pretend the woman's going to outlive the man. Okay, let's play through the scenario." Well, the higher of the two social security is going to be there and then from a pension standpoint, you want to know what pension option was selected.
I want to tell you a story that a colleague told me once. He was sitting down with a client and it was a husband and wife, and he was a preacher at a church. And he was going to get a pension and they each got social security and he's sitting down with the couple. And apparently he'd already made his pension choice. And he goes, "Okay, well what's your pension amount?"
And he goes, "$2,000 a month." He goes, "Great, which pension option did you select?" He goes, "I get a 100% of my pension." And he turns to the wife and goes, "Now, ma'am, do you realize what he just said?" And she goes, "No, I don't." And he said, "Well, why don't you tell her what that means?" And he goes, "Well honey, when I pass away one day, my pension is going to stop." And he said, "You could have knocked her over with a feather. She was stunned. She had no idea." She was, "What? What do you mean my pension's going to stop?" And he goes, "Yeah, we signed to get my full amount of money. So one day that pension is going to stop."
And the worst part is, we're in Arizona, which is a community of property state, she had to sign something saying that she knew he was selecting that option, probably didn't explain to her. Maybe she forgot. And my colleague goes, "Well ma'am, it gets worse." And she goes, "How could it get worse?" He goes, "Well, tell her what's going to happen to the social security." And he had the higher social security. She had the lower social security. Her social security is going to go away. So she was going to lose $2,000 a month from his pension and $1,000 a month, or actually $2,000 a month, I'm sorry, $1,000 a month from the difference. He was getting approximately $2,000 in social security. She was getting approximately a thousand. She was going to continue his $2,000 so $3,000 worth of income was going to go away when he died.
And she's freaking out at this point. She's going, "How can this be? What are you talking about? That's going to be my income one day?" And so he goes, "Well, what's going to be your plan?" And the preacher goes, "Well, I have a plan, don't worry. When I'm gone one day she'll just marry one of the deacons from the church." And it just was like, "That's your plan for your surviving spouse? You want to make sure that her plan is to have to be forced to remarry somebody to get their benefits?"
Now if you were to ask most women, "Do you want that to be your succession plan?" They would say, "No." And for most men, I don't think they want that to be the succession plan, right? So again, you have to find a solution to make sure that the woman is going number one know, "What's my income going to be?"
The same goes for annuity choices. If you have an annuity, you're going to need to choose between a single life, joint life income. You want to know which option is going to be there. Now, I'm not going to get into ways to maximize those benefits in this video. I'll do an entire pension max, annuity max video so that you can show, strategize on a way to take the higher incomes and still protect your spouse. That's a whole separate video.
But number one, if you're a woman and you're statistically going to outlive your husband, you want to know what is your income going to be. Number two, what is your plan for care? Most of the time, and it's sad, a lot of times if you don't have a plan for care, you really do, but it's the government's plan for care. If there's no money set aside for you to use at a later stage in life. When women do live into their upper 80s and 90s where their bodies break down, they become disabled and they need somebody to care for them, okay?
You've got to ask yourself, one, what is the plan for care, but what do you want the plan for care to be? Because if you're going to be planning for that stage of life, do you want to be cared for in your home? Do you want to go to a facility? Do you want maybe your family members to be respite nurses and come in and take care of you? Who's going to pay for that? And where's that money going to come from?
They're saying today from HealthView Services, which is a phenomenal nonpartisan nonprofit resource that the average married couple, 65 years old today will need somewhere in future dollars of 537,000 to cover care costs and retirement. I've seen projections where care cost will eclipse 90% of somebody's social security check. So if 90% of your social security check is going to go to cover healthcare costs, where's the money going to come for food, shelter, clothing? And that's the question, right?
So again, what's the plan for care and what do you want care to look like? If you don't have a plan for care the government's plan is you'll go on state aid, you'll become a ward of the state and you can end up in a facility that you may not want to be at with the quality of life you may not want.
And that brings us to our third question, which is, what's my guarantee to maintain my standard of living or my quality of life in retirement? And that is a question that encompasses the first two together and says, "What's my guarantee that I'm going to have that?" If you have an income or a plan for care, is it guaranteed? Are you in a longterm care policy that's going up by 50%, 40% and the premiums are going through the roof where maybe you may be forced out.
Again, I'm not bashing longterm care insurance. I think it's a valuable tool that could really serve a lot of people for your specific scenario, but you want to determine, is it sustainable? Will you be able to maintain that premium to take care of self on retirement? If you're self-insuring, what's your guarantee that those assets are going to be there for you to use when you need money for care and they're going to be enough.
If you need additional income because other income stream stop, will there be life insurance to pay you out so you can use it to create your own income? Are those incomes guaranteed and secured through annuities or pensions? They're going to give you those choices, right? You're going to have a guarantee that you'll be able to maintain your standard of living. And then is that standard of living adjusted for inflation? Are you going to be able to realistically buy what costs of goods and services are going to be if they go up over time in today's dollars?
So again, you want to ask, "What are the guarantees?" Have you removed all of the risks to make sure that you're going to have the quality of life in retirement? I bring this up because I'm tired of talking to this sweet little 80 year old lady. I don't want to talk to anymore of you. I don't want you to come to my workshops. I want you to be sitting on a beach or sitting at home or being cared for with dignity and a quality of life that you want to have.
So again, these are the three questions I would ask. "What is my income going to be? What is the plan for care? And what do I want it to look like, as a separate little add on question." And third, what's my guarantee that I'm going to get to maintain my standard of living and quality of life in retirement? If we can address those three questions upfront while you're with your partner, you can plan for them and have phenomenal retirement.
As always, if you'd like to see any other videos, you have any suggestions on blog posts or additional videos I can make, please feel free to leave those in the comment section below. I'm Danny Rondberg. Thanks for joining me.