Retirement: A Team Sport

The differences between men and women – this subject has been (and will invariably be) one of the most pursued points of study, reasons for argument, or simple sources of everyday curiosity for humankind until our species’ inevitable end.

When the sun begins its death throes and we pack our families away in future SUVs on some exodus to another planet or some deep cave, Husband will still be yelling at Wife to hurry up, while Wife yells at Husband for forgetting to pack the sunscreen. Despite the fluidity and ease with which your own marriage unit operates, you have been a team now for a long time. Retirement is no different—you need to both prepare as a team and act as a team throughout.

One of the first forms of advice Kendall and I end up giving our clients is, “You need to bring your wife in to discuss this together.” On some occasions, it is “your husband” that needs to be included; but in most cases it is one member of the family that has been doing the brunt of the investment work and retirement planning. This just doesn’t make sense when it comes to retirement, nor does it make sense to look at retirement assets as if they are separate pieces of a puzzle. Everything needs to work together, separate investment mindsets included, to prevent the ultimate risk retirement entails—running out of money.

There are two differences between men and women that I feel fairly safe in labeling “true” without offending anyone. On average, men die before women, and men on average take more investment risk than women. This first point, the death of the man before the women, can be a terrible bump in the road of retirement if not properly prepared for. If Husband is the one that takes care of all the retirement assets, and never includes Wife in the planning and investment philosophy, she can be left completely in the dark at his passing. How will she be able to properly insure her retirement success if she doesn’t know how her retirement plan has made it this far?

What of the second point, involving differences in investment risk between the sexes? In “Best of both worlds,” a small article in InvestmentNews, reference is made to a finding of the BMO Retirement Institute that women tend to make far fewer trades in and out of investment products, which allow them to better weather the recession than men. Now for you ladies who are saying “I told you so,” you have something to learn from the guys as well. That ultimate risk of retirement we spoke of (the risk of running out of money) requires a little risk taking to avoid. To insure you don’t run out of money you have to beat investment fees, taxes, and most importantly, inflation. If you take zero investment risk, say, by keeping everything in a checking account or other low interest paying “safe” investments, inflation and the other costs can quickly lead to your defeat.

A proper balance of these differing investing mindsets can benefit your retirement team. Men must learn from the women, who recommend restraint, while women must learn from the men wanting to shoot for the moon. When it comes to retirement, both must be involved in the process, as a team, for success to be possible.