Question: How do you scare an elephant? Answer: Unique up on him!

Get it; you sneak up on him … that’s an example of one of my husband’s cornier jokes. In a few years the grandkids will appreciate Papa Pete’s unique sense of humor.

A financial profile is unique. However people do still ask, “What are your other client’s doing?” which is a good question.

Everyone is different so what we do is different, but the process remains the same. We first go back to their original plan or Investment Policy Statement and review why we own what we own. If any changes do need to be made we’ll discuss the best way to implement them and continue the process of reviewing objectives, philosophies, resources and goals.

Here are a few basics that apply to most everyone.

n Keep three to six months (minimum) of living expenses available.

n Pay off all debt.

n Set aside 15 percent of income for pre-retirement or tax-deferred plans.

n College Funding for children and/or grandchildren if applicable.

n Pay off primary residence.

n Build long-term wealth.

The problem with a “one size fits all” approach is that it’s never the best fit for you. Is your best friend’s tolerance for risk the same as yours, do you and your neighbor agree on the future of the economy, health care, taxes and politics in general?

Financial needs change over time just like changing financial markets and the external factors that influence them. So what’s a woman to do? Start by being nimble, teachable, and focused. Since that sounds like something my pilate’s instructor would say, I’ll also remind you to stay healthy.

Invest in health

Physical wellness is a valuable financial strategy. Those who invest in a healthy life style can enjoy better health and lower medical expenses for decades.

Educate and participate

Women who are married should not ignore retirement planning or leave it totally to their spouse. Women have different concerns about their retirement years that may not be properly addressed if they do not participate in the planning.

Save early and often

Women typically spend fewer years in the workforce than men, so getting an early start on retirement saving is essential.

If the goal is to accumulate a $500,000 nest egg in the next 15 years you’ll need to invest $17,050 each year, compared to the $4,087 required each year for a 30 year time horizon assuming an 8 percent annual rate of return.

This theoretical example is for illustrative purposes only and assumes investments are made on the first of the year and returns are compounded annually. Please remember that investing involves risk including the potential for loss of capital.

Estimate life expectancy

Underestimating our life expectancy puts us at risk for not saving enough money. Once a woman reaches age 65, she has a 49 percent chance of living to age 89 and a 23 percent chance of living to 95. Sixty-four percent of women worry about outliving their money compared to 46 percent of men. Recognize the concerns with regard to longevity.

Suppose you plan on retiring with an annual income of $75,000. If you assume a 4 percent inflation rate and want to maintain your current lifestyle, you’ll need an annual income of $111,000 in 10 years and a whopping $164,000 after 20 years in retirement. If you start now you’ll have a much better chance of protecting yourself against the negative effects of inflation. Do a longevity estimate and add a few years to create even more financial security. Who wants to run out of money before you run out of life?

Have a balanced plan

Many people wander into retirement without a plan. Legislators have decreased the lifetime value of Social Security benefits by raising the age for full benefits and introducing the taxation of benefits for some retirees.

Social Security and most employer retirement benefits are tied to earnings. This is one more reason that women’s median income in retirement is only 58 percent of men’s.

Build a retirement plan that includes: guaranteed sources of income (Social Security, pensions, annuities), growth investments that can potentially keep up with inflation, and insurance to protect against significant losses (life, disability and long-term care insurance) where appropriate. Please remember that the guaranteed income from annuities is subject to the claims-paying ability of the insurer.

The MIT (Massachusetts Institute of Technology) AgeLab found that women are more concerned than men about retirement risks, and for good reason. The only aspect of retirement that women don’t worry about more than men is having enough to do!

Both sexes worry about inflation, health care, and a decline in physical health. For all the reasons outlined women do face greater challenges in planning for their financial future than men. And if you’ve ever wondered if there really are more women that men out there, it is true; there are more women than men as we age. Among women age 65 and older, 60 percent are single compared to 29 percent of men, and as women get older, their probability of being single increases. Older women are three times more likely to be widowed than older men. Women marry men who are older than they are and older women don’t tend to remarry.

The good news is that some worry is a good thing. The flip side of every liability is an asset, and some level of worry motivates people to plan for their future. Turn anxiety into action.

Darcie Guerin, Financial Advisor & Branch Manager, Raymond James & Associates, Inc. located at 606 Bald Eagle Drive, Suite 401, Marco Island, and FL 34145 provides this article. If you have questions please contact Darcie Guerin via e-mail at Darcie.Guerin@RaymondJames.com. Phone (239) 389-1041, toll free (866)-343-0882 or at RaymondJames.com/Darcie. Past performance may not be indicative of future results.

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