Webinar Replay - Closing the Retirement Savings Gap for Women: How Sustainable Is Your Plan?

Rachael Sampson:
Perfect thanks Quentin and hello everyone I am Rachel Samson, Director of Key4Women here at KeyBank and I want to welcome you to our program today.

I encourage all of you to please use the chat box throughout our presentation today to answer your questions and we will address as many of them as we can during our Q&A portion at the end of the program.

As, you know, today, we're going to discuss retirement planning for women, the factors that are unique to women and the actions you can take to help you work towards your goals. Now, it is my pleasure to introduce today's expert panelists.

Joining us today is Nancy Anderson, Senior Vice President and Regional Planning Strategist with Key Private Bank. Nancy has over 25 years of experience, providing sophisticated, financial solutions to individuals, business owners, and families. Prior to joining Key in 2014, Nancy served as director of a financial advisory firm, providing retirement planning solutions, and tax advice for executives of Fortune 500 companies across the country.

Nancy received her undergraduate degree from the University of California and is a Certified Financial Planner. Nancy has penned a popular personal finance column on Forbes.com since 2012 sharing guidance on retirement income planning, insurance, and financial planning topics. She has been quoted in various financial publications, including Barons, The Wall Street Journal and CNBC online, and is a member of the Financial Planning Association - Utah Chapter.

Also, with us today is Dennis Andres. Dennis is the Key Private Bank Market Manager for northern Indiana and Southwest Michigan and is a Certified Retirement Planning Specialist. Dennis has worked in personal finance for over 13 years. And most recently served as Senior Manager - Wealth Management for TIAA and he was also an active advisor for Morgan Stanley. Prior to working in finance, he worked as a consultant and was formerly on active duty in the Marine Corps. Denis received his undergraduate degree from the University of Pittsburgh majoring in psychology and women's studies.

Dennis and Nancy, thanks so much for being here today.

Nancy Anderson:
Happy to be here.

Rachael Sampson:
Awesome. Thanks. Well, let's go ahead and just dive right in.

As we see on the slide here, there's so many factors that can impact women's retirement savings. Not all will apply to everyone, but we know that many women face these in their lifetime potentially, at some point.

Dennis, can you talk to us about what some of these factors out are and how lifespan plays a particularly important role in one's decision making?

Dennis Andres:
Sure, Rachel, I think that lifespan is particularly interesting and relevant to any planning discussion. A lot of people start with thinking through their own life expectancy. But it's a personal thing so they think about what the charts say men are, I think, 79 plus or minus and women, 80 or 81. But something that is frequently missed is that life expectancy changes for couples. And so, taking into account what the life expectancy is for a couple, and some of the demographic contributors can be dramatically impactful. And specifically, taking into account, widowhood. So, I think it's important to understand that the national average length of little in the United States in about 13 years.

And unfortunately, or fortunately, depending on your perspective, 7 out of 8, usually widowed people every year, are wives not husbands. And so, taking specific account of the fact that there's a possibility that you'll outlast your husband by a dozen years, or more is really important. A specific example that I use a lot in, in illustrating how important that is, are the tax consequences. One of the hardest things that I've witnessed since coming into personal finance is having to give paperwork over to a widow or a widower right after the first of the year and have them certify that after 30 or 40 or 50 or 60 years of marriage that their life's partner, their best friend, et cetera, is gone, they're certifying that they're single, right? And so, moving from a tax chart where you are married, filing jointly, to the single filing individually, tax break has a dramatic impact, and it can be profoundly meaningful to you both positively and negatively.

Unfortunately, mostly negatively that more of your money is taxable and higher rates. And so that can be as much as a 40% increase in the tax bill for the exact same amount of money to maintain the that lifestyle for the surviving spouse. And so, being cognizant of how that life expectancy can impact you unexpectedly is super important and so I think that's a fantastic place to start for this discussion is -- how do we plan to be sustainable now?

That's specific, obviously to marry people being divorced or having never been married has not dissimilar challenges. Obviously, there's not a surprise change, but that can be impactful from a planning perspective, just considering how long you really will live. Right? So, when we see the 79 or 80 as the average life expectancies, that's everybody. But the truth is if you're on this phone, you're, you're concerned about planning. The high probability that you have a higher level of education that you're earning more money that you're saving money and those are positive impacts on life expectancy. So, you can't just count on the fact that you're only going to make it to 80 plus or minus and then get out of here you have to take into account that you could significantly exceed what your initial expectations work for the life expectancy.

Rachael Sampson:
That's so true and that's so many compelling statistics that you shared with us and, as you think about it, just being very real, and, you know, of course, the elephant in the room, and that we're currently experiencing a pandemic and unexpected loss. So, I think this this conversation is so important and, as you said, you know, the factors of most of the folks out in the audience that expectancy could be longer than that 13 years for those that are widowed given potential health outcomes and, and higher salaries - things like that that you mentioned, it could definitely be a lot longer for 13 years.

I'm pleased we're having this discussion and, Nancy, from your perspective, given your vast experience as a financial planner, how do women differ when it comes to financial planning in terms of risk and bias and engaging with a financial advisor? And what are some of the most important steps we can take to achieve our retirement goals?

Nancy Anderson:
Sure, absolutely Rachel. I think though the issue that women may have is if they are risk averse. But it also is their greatest strength because women tend to be better investors in men, they get higher returns. Studies have shown that women get higher returns and men, there was a 2001 study showing women getting at 2.3% returns higher. And then a couple of recent studies showing almost half a percent and almost 2% per year. And I think that's one of the reasons why is that women tend to be risk averse. So, they're not taking excessive risk.

And the other reason why they might be better investors is that they're patient. So, women tend not to trade as much as men. That one study showed women traded 30% less than men. So, they're more of a buy and hold and then the other thing is that women will use the word humble. Women are more humble; they're not overconfident. So, there's, they’ll probably to do better investing than they realize. So that that's good to know because there is a gap – a retirement savings gap. Dennis mentioned longevity. But there's also often women are out of the workforce for a certain time period to take care of family or be a stay at home mom for a while. So, there is a retirement gap. A savings gap.

So, the issue with women that comes up is when they're overly cautious. The studies have shown women do a great job investing when they do at. But those that don't – if 30% of women don't want to invest because they are concerned about losing everything. And so that is really a knowledge gap. Because what happens is then it's hard to reach your goals. When you're not getting when you don't have Equities in your portfolio. So, equities are stocks, right? Stocks is an asset class and it tends to outperform.

And when we're talking about retirement planning, we're talking about starting your retirement planning when you're working in your twenties and thirties all the way into your sixty's. And then, as Denis says, women are living to 81 and up into their nineties. So, retirement planning is a long-term investment so there is a place for equities.

If women can close the knowledge gap of investing and able to put a few more equities into their portfolio in a way that is appropriate for them then that can help meet their goals.

Rachael Sampson:
That's great and let's talk a little bit about that as you talk about that portfolio and financial planning and how important that is, can we talk more specifically about the plan itself and what that is? What it looks like, and why do so few women actually have one?

Nancy Anderson:
To absolutely yeah, one in three women have a plan. Need to figure out why, because women tend to be planners, we're multi multitaskers. We're running households. We're planners by nature. So why would only 4th of women have a written plan? So, we think it's sort of two opposite reasons that a third of women manage their own money and do it well, like we said. But it's sort of like managing their own money. So, they might not be thinking they need a retirement plan. They might think they have it and then the other women may, we think, are concerned more about investing and that gap of knowledge.

Financial planning actually is a relatively new profession. In 1978, that's when the 401(k) started with the Revenue Act of 1978. The financial planning profession started with that because what happened is, we used to have a pension. Back in the day, you work for a company for years and then you get a specific amount per month for the rest of your life. And when you have that, you don't always need planning.

So, with the, the starting of the 401(k) by 1981, 50% of companies had a 401(k) plan. Financial planning started with that. Financial planning is the definition of financial planning. It is meeting your own personal goals and saving, investing, and then spending for your goals. We have multiple goals that are competing for your dollars and that's where a financial planner can come in.

And Rachel, as you said, I've been doing this for 25 years. So, you're going to have a little soapbox here from Nancy about planning because it's hard to do. So, you asked about how to start with a plan. So, let's think about how.

The best place to start is similar to planning a party. If you're planning a party, the first thing you do is you pick a date and then you work backwards. Same thing with retirement, which is really what we're, I'm saying retirement you can always just always think financial independence. Cause that's financial independence like, if I can retire today, but I don't want to. That gives you power, right? So, pick a date and then work backwards so that the age 60, age 55, and then work backwards. one of the things that you want to think about is what is the amount of income that you're going to want each year. And there's a rule of thumb for employees for executives and employees. That rule of thumb is 80% of your salary. The reason we pick 80% is that a lot of things are taken out of your paycheck. Right? So, you're, you're putting hopefully 10% into your 401(k).

And then you're also paying into social security, which is over 7%. So, 17% of your check now is not coming into your net. You're going to pay taxes in retirement. So that's when planners look at, well, there might be some expenses in working. So about 80% would be what you're making now. So, I think that's the minimum. Wouldn't it be great to get a raise when you retire? At least for 20 years so when we build our plans, we build in lifestyle buffer.

So that you can you'll tend to travel or do the things that you haven't been able to do because you haven't had time. So, you may tend to do those for a few years. But I say 80% of your salary is the rule of thumb. Why not 100%? And then work backwards how much you need to save. Then what kind of returns do you need to get?

Rachael Sampson:
That's great. And you're right, people work so hard throughout their lifetimes being able to enjoy that. I think is important to understand and having that cushion in there.

And I know you talked about employees and some executives, what about our business owners that may have a salary? But they may have additional bumps, depending on increases in their salary given the performance of their particular business. Does that look any different? When we look at that 80/20 rule of that 80% rule of thumb.

Nancy Anderson:
Yeah, that's a great that's a great question because business owners are a little bit different. There's two parts of that. one when you mentioned, Rachel, is that their income may not be consistent. So one thing that business owners might want to do is dig a little deeper into expenses and determine what number you want and that's actually one of the hardest things for people to do kind of think about - what's that number? Is it $80,000 a year net of taxes? Like, what do you want to live on? And then we work backwards from there and when we look at what lump sum do you need today to generate that for your lifetime as well as other goals?

With the business owners there's a caveat. Business owners rightfully so have business expenses and so often some of your meet the needs, wants and wishes some of those needs are baked into your business expenses. And so, you would just want to make sure, for example, sometimes a vehicle, sometimes travel, like adding personal travel to conferences or business travel. And then the other thing is, your cell phones. My cell phone bill is just my husband and me. Right? So, with a lot of business owners have these expenses baked in.

For business owners, I would drill down a little more on what income you really want in retirement? Then look out two things, one is how much you need to save and then how much maybe you're going to be selling your business. So, I suggest business owners work with a financial planner, because there's more complexities.

Rachael Sampson:
And that's interesting. Having a financial planner, ask you those tough questions in order to prepare. But then, how does one go about engaging a financial planner? Are there a minimum requirement such as salary, or, you know, around all those around income or net worth in order to engage a financial planner?

Nancy Anderson:
That's a great question, because we want everyone on this call to feel empowered to be able to take a next step. So, let me talk about 4 different ways to engage a financial planner and the question is a little bit is net worth and a little bit is complexity. And then, as I mentioned with the 401(k), so your investments are really tied to your retirement plan because now we're in charge of our own investments. So, that becomes an important part is the investment management. So, keep that in mind as we go through the 4 different ways to engage a planner.

So, the first way, if you're starting out, it's more simple, or you are a late starter, and you really want to get some kind of basic planning. one place that you can go if you're an employee is check your Employee Assistance Program, there might be a financial wellness program that your company pays for that, you can connect with a financial planner probably online, or like this on a zoom and they can help you with doing that retirement planning that we just talked about -- 80% of salary and working backwards and helping you with the asset allocation. And tons of resources to close the knowledge gap.

A second place to go for if it's on simplicity or if there is not an EAP where you work is, you can look at your 401(k) provider. So, your 401(k) provider may provide some retirement planning and calculations with their service. There might be an additional fee for that. But I'm sure there's a plethora of information to close the knowledge gap. So those are two places that you can go.

The next the next one number 3. I'll be looking at your financial institution, so, there's several different options with KeyBank. one is through Key Investment Services through our Wealth Management in our retail branches. Key Investment Services - usually this will be a little more complex. You get one on one on they're usually looking at a minimum of $50,000 probably up to over a $1,000,000 up to over $2,000,000. So, there's a wide range there and the Key Investment Services can help you with the different multiple goals that are competing: getting out of debt, saving for retirement and then frankly, enjoying your life today. So, everything can't go toward the future.

And then 4th is Key Private Bank, our Wealth Management, which is where I work as the Regional Financial Planner. With Key Private Bank, we're generally working with more complex tax situations - business owners that are selling their business for over the $2,000,000 up to $20,000,000, $30,000,000, then our family wealth team works from there. So, all of those are tied within the investments. So, the suggestion that I make is to work with a financial advisor, who has a continuum like we have at Key because we're going to help to put you with the right advisor and that has the right experience. Our highly credentialed advisors are going to be pulled into your particular needs and goals. Makes sense?

Rachael Sampson:
Yes, it does. And that's extremely helpful. In terms of getting that starting place. Or, as I like to say, you know, we get that annual kind of checkup and we're doing that doctor and getting that second opinion of getting that. second opinion too sometimes for these financial planners, so that's a great way to start.

And I, I love the idea of the continuum because, of course, we're earning over time. Today we may be in one bucket and it's Key Investment Services potentially. But if I'm a budding entrepreneur, and my hobby turns to gold, then I potentially could be in Private Bank and working with them. So, I love that idea, as you said, as you consider who you reach out to, in terms of engaging with the financial planner.

So, as we talk a lot about, and you mentioned several times, about savings and investing and those competing priorities I know we've got some challenges. But, Dennis, can you talk to us about the importance of savings and investing when it comes to a financial plan? And what are some of the challenges that you've personally seen or learned about when it comes to women and savings and investing.

Dennis Andres:
Sure. Once upon a time I used to talk in front of large crowds about enrollments, right? And one of the things I would just start with was that question. People could raise their hands and I would ask, what do you think is the number one thing that’s indicative of financial success in retirement. People have raised your hand. Sometimes they'd say good investments or whatever. But the truth is - did you save, right? Yes or no? You just say it's a super simple question, but I see your first tab there. It says start now, no matter of the amount and that's true. Just simply getting started is of the utmost importance. And as early as possible.

Specific to women it's mostly anecdotal, but the truth is, Nancy alluded to this while she was speaking just a moment ago, women tend to be stewards of their family, their lifestyle, et cetera. They tend to be far more disciplined than their counterparts / husbands / partners just men in general, and as a result, it translates to future success in out earning men in general. And so, I think that a couple of things that are really important for women to take into account are simply just doing Too often I see people come into the office couples, especially where they've said something like - Well, he made so much more money than me. So, we decided to really concentrate on his 401(k) because we thought it was better. It creates disparities. It creates challenges from a planning perspective when the bulk of assets are titled in an individual's name versus another’s or jointly.

My own parents were a victim for that. Both of them were professionals. They were both fortunate enough to have pensions ultimately, but because my father was out earning my mother, they felt like they should focus on his retirement thinking that it was obviously better simply because he made more money. Ultimately, they stopped doing that when I pointed it out to them. But it's pretty consistent and I've seen it entirely too many times and certainly that can create planning issues, legacy issues, and accessibility issues. Specially as laws change and inheritance change, and how you get to get it, how fast you have to spend it, etc., the taxes. So far, the spouses have been exempted from the hardest changes to that. But that doesn’t mean they won’t be impacted in the future. So, safe is my first challenge.

Frequently I see deference to something, someone, somebody else. Maybe it's just an internal bias. Sallie Krawcheck who used to be in charge of wealth at Morgan Stanley and I think for short time at Merrill Lynch, it could be wrong about that, has since gone out on her own with a consulting group. A few years ago, she figured out that approximately 92% of wives will have to take over sole responsibility of the household finances prior to their spouse dying. That's a crazy notion. Especially when there's usually some sort of division of labor. It doesn't mean that the wives weren't necessarily involved so that they weren't equal partners, but they at least lost their sounding board.

And so, to Nancy’s earlier comments about knowledge gap, which is really important that you take the time to ask good, challenging questions and make sure that you feel comfortable, even if you don't necessarily understand, you feel comfortable in asking questions until you get it right.

Just for a moment, I will go back to how do you engage with a financial advisor, or pick a good planner? I think it's important to find somebody that will listen to understand as opposed to simply listening to respond. I feel like everyone, that should resonate with everybody certainly resonates with me. The truth is Rachel just used the analogy of getting your annual checkup. There was about maybe 10 or 15 years ago that I was really struggling with chronic cough that I had since I was about 15. I was so tired of going to the doctor that I've been seeing for over a decade because I felt like, he was literally just waiting for me to get out. I happened to be on a visit with my wife to her general physician and I realized that she was really listening to my wife and trying to understand. And so, I immediately switched and so, candidly, I haven't seen a male physician in over 15 years because I felt like somebody was listening to me. Sometimes it's funny to hear that story, but it was meaningful.

And I think it's the same kind of relevance here in finding somebody that will listen to you whether it's a male or female advisor. I think it's unimportant. Just so long as they will listen to you and try to understand what your challenges or concerns are without dismissing or glossing over. You know, I think that those are kind of the core challenges I see. The truth is women overall generally do outperform men that comes down to that discipline once they understand some challenges. A lot of times they become very engaged. But it's finding a connectivity with those clients so that they feel 1 comfortable and safe, but to feel encouraged and empowered to challenge. And once they've done that, you know, sky's the limit really you can recover from all manner of, of the previous challenges, or misses pretty quickly to make life dramatically better in the future, at least financially speaking.

So, I think those are some of the really important aspects of saving and investing for, for women from my perspective.

Rachael Sampson:
I love that, and I loved about feeling empowered to make your decisions and understanding and trusting yourself and making sure that you are seen and heard that it is a relationship, for sure. And when you're engaging with a financial planner, it should feel just like that. I love hearing stories like that, and making sure I'm, of course, supporting our providers and entrepreneurs that are women, of course, is a wonderful thing as well.

And I just want to stay there for a moment too, because you brought up, of course, economics and we've got tax rates, things like that. And as we think about rates in general, more about when we think about a lot that we've heard lately has been centered around the current rate environment, what's happening, where it's going. Based on where we are today and from your perspective, Dennis, should we be looking for opportunities as we think about savings and investing? Should we pay down debt, refinance student loans or mortgages lower rates or even downsize, potentially, our homes given the real estate market and how that looks today or is it better to just save more? Or is there a right strategy? If there is such a thing.

Dennis Andres:
So, let me revisit something very quickly that Nancy talked about, she was alluding to how much to say that 80% target. And I think that ties nicely because this. To Nancy’s point, it's not always easy to figure out what those goals are, right? I always tried to make it as simple as possible for people and say, look at a snapshot a year ago and then today. If you had $10,000 last year in the bank on the same day a year ago, and they were $100,000 worth of deposits, and there's $20,000 dollars left today $90,000 bucks was spent - an average of $7,500 dollars a month, right?

Understanding spending goals is, I think really important in taking into account what the right answer is for an individual. To this question, do I save more? Do I pay down that? Do I downsize? I changed my lifestyle et cetera. I think that that becomes a very specific, individual question. Generally, speaking, I favor saving strategies first. I can deal with debt second, but I feel like if you don't have the resources in the future from which to draw, you've already lost right? So, saving as a first strategy is always my personal default.

second smart debt. You know, not all debt is bad. If you have 0 interest for car loans, and you have the ability and the resources and the cash flow to cover, while having still maintain ongoing savings, and they have left the, that lump sum in an investment that's going to benefit you significantly long term.

All right, so if we, if we use 8% that as an annualized rate of return, that would have your investment doubled in 9 years. So, if I was going to spend $50,000 on a car, but instead was able to carry the debt at 0 interest for 5 years, or whatever. Nine years later, my $50’s worth $100. I still own that car, and I've had 4 years without the car payments. So just simply being smart and evaluating each piece and not having preconceived notions about what's good or bad from a data perspective I think is really important.

For women business owners I feel like we're going to get to this, so I won’t go too far into it, but a lot of women tend to be more self-sourcing from a funding perspective than their male counterparts. And because they're risk adverse and tend to want to not have that debt, a lot of times they put themselves behind the 8 ball by having not gotten the benefit of long-term compounding interest and compounding growth on their on their resources.

And so, I don't feel like I'm necessarily answering the question specifically, but it becomes a moving target. I default to savings first, smart. Get after that and sustainability, so I, I really take a look at how much money am I spending? I look at that starting date, the ending date. What was spent over the last 12 months? Were there are irregularities or 1-time things that impacted it? What's a real spending target look like, for me? If my $7,500 a month covers all of my expenses and leaves me excess funds, where was my best savings opportunity from there first? Maybe I'm maxing out the tax deferred part of a 401(k) and I could afford to do the walk side instead. Maybe I haven't maxed out an HSA account yet and I could. Maybe I do have debt that's at a higher interest rate that I could pay down, but it becomes very specific.

My guidance would be to not have preconceived notions. Be open to flexible options and understand how best to target those things. And that comes from having a good financial advisor, truthfully. Somebody that can give you that guidance, look at your overall plan see how it's impacted and what you're going to get the greatest return on. Does that make sense?

Rachael Sampson:
Yes, it does, and I like the idea of being open and flexible. It was interesting. You touched on something too about that good and bad credit. So often we hear about oh, they don't do credit cards because they're bad or I never finance this, and I only pay cash. And then you touched on another really important topic on business owners, about, you know, how difficult it may be to save. And of course, now with the impact of Covid. So, I want to kind of stay there for a second and say, you gave us a lot of advice about being open. But are there specific things that we should consider given we experience Covid and all these things that have happened. Any words of wisdom there?

Dennis Andres:
Patience. Really, honestly, thoughtful patience, I think is really important.

A lot of times people will panic and then make rash decisions without first, having investigated these are options, right? So be patient enough with yourself and your business. And that doesn't have to be a long time. I'm not saying, wait it out months. What I'm saying is - Don't be reactionary. Take the time to be thoughtful. You look at where your business is. You know, look critically as if you were buying your business from yourself, where the holes, where the challenges were, where can you be more lean or where should you invest additional dollars if you have them and then look for options right? But look to your own assets, I think, last.

There are SBA loans. There are personal loans. There are secured lines of credit. There are unsecured lines of credit. There are significant options that are available that prevent you from having to divest from your long-term assets. Women, dramatically more than men, go to their own resources first and it has a long-term negative impact on your own sustainability in the future. So, do take the time to investigate what's available to you prior to making that decision. I think it's the best advice I can give anybody facing the challenges that Covid has created for us.

Rachael Sampson:
That's awesome, thank you so much for that insight.

As we talk about those challenges and a lot about savings and investing in that budget, and, of course, patience, Nancy is there, you know, how does one think about. Okay, I've got this set number of bills every single month and expenses that I have that I have to think about, and I'm trying to save and invest and create a budget and have all of that plan together but how does one really determine what's appropriated? And how do we have that kind of hard conversation with ourselves? Are there certain things that we should be cutting out? Certain things we should be doing, adding to? Just interested in your thoughts and adding on to what Dennis shared.

Nancy Anderson:
Sure, absolutely. Rachael.

This is a hot topic because it is something that is very personal and everyone's situation is different, but there is a framework that you can use with what Dennis mentioned about looking over year over year. And that framework was popularized by Senator Elizabeth Warren a few years ago. The 50-30-20 rule. That budget means 50% of your take home pay would go toward your fixed expenses: putting a roof over your head, basic food, and utilities and such. Then 30% for wants and variable expenses, which can be clothing, you know, there's a need and a want kind of thing, entertainment, that type of thing. And then 20% for savings and that's long-term and short-term. So, depending on how you set that up, if you have no short-term savings and put the whole 20% toward that, until you get, at least a month’s emergency fund. But that 20% is for saving and investing. But the magic, Rachel, the magic is in that 30% of the wants.

And for those people who have you have a little bit extra: so, first, you want to make sure that you don't have more than 50% of your take home pay going for needs. But then, you look at the wants. I have found over my career that there are so many people that, including myself, waste money. Money flows through our budget and we waste it. And so, I think if you track those wants going back and seeing, where did you spend on entertainment, clothing, going out to eat - that type of thing? I'll give you an example.

I was helping a young entrepreneur to budget because he couldn't understand why he was going into debt. And when we looked at his budget, we found that he was funding a couple $1,000 a month on food. And he’s single. And so, this might seem simple. But I suggested he got a friend to teach him or take a class on doing some basic cooking. I jokingly told them how to make a peanut butter sandwich, because he was getting breakfast on the way to work. And then he was, this was pre-COVID, going out to lunch every day or having lunch in and then grabbing dinner. It was every meal was eating out and it's because he was focused on - you don't want to spend the time cooking - because he was focused on driving that business. But it was a red flag. So that's an extreme. But the same thing is going out to lunch. For me it was going out to lunch with my girlfriends. I looked and saw - Wow. I'm spending a lot of money that I could be investing, or it could be saving to spend on something I really love. So maybe for me, it's a spa day at fancy spa, right?. A fancy spa so that instead of letting that money go to waste, or for someone else, it might be taking your family on a vacation or whatever that is the things you left. So that 30% is the magic.

So, 50% on fixed 30% on variable and your living today goals and then 20% for long-term is a good framework for just about anybody to use for budgeting.

Rachael Sampson:
I love that, and I think we could all use a spa day so we're going to leave it there and move towards our Q&A, because we've got a lively Q&A session. This has been fantastic, but before we move into that, I want to ask our attendees to please, please, please complete the survey in the chat box. And if you are not already a part of our program at Key4Women, to use the QR code on the screen and join our program so that you're the first to get access to our content, our expert panelists such as Nancy and Dennis and join our membership organization.

So, please continue to enter your comments in the chat box and the survey link as mentioned, and I'm going to just go ahead and then dive right in, Nancy and Dennis, with some of the questions that we've already received.

One of the first ones that I really want to talk about are trust accounts. And my apologies, I'm trying to scroll through it, and I saw it was about trust accounts. What's your opinion or recommendation regarding establishing a trust account in order to transfer assets on death? And is there a minimum amount of assets that be considered in order to trigger to establish a trust?

Nancy Anderson:
So, when you were looking at the goal, so it sounds like the goal is to transfer assets to the next generation in a way that is affordable and is possibly private. That type of thing is setting up a revokable living trust. There are also different types of trusts that are irrevocable that can have some parameters for the kids. In terms of setting up a trust - usually trusts are set up with an attorney - but first place you go is to talk to the financial planner about what your goals are. Then determining what are the type of options that you could do because there are some things you can do without setting up a trust, then going to the attorney.

In terms of dollar amounts, it's more of the fact that there's a fee by an attorney to set up a trust, so you want to make sure that it's sort of worth it. I hesitate to say a dollar amount there, but if you have assets going to kids that you want to go to family members that's I would say a minimum of $500,000. They might already have it set up, so it transfers with a beneficiary.

Rachael Sampson:
Okay, and that's great and very helpful. Dennis, anything to add from your perspective.

Dennis Andres:
I would just want to reiterate what Nancy said about having a goal, right? You want to understand what you're attempting to accomplish and that when you question somebody about it, whether it's a financial advisor or planner or the attorney, their first question should be, what are you attempting to accomplish?

Great because to Nancy’s point, if it doesn't make financial sense to pay for the benefit of a trust you might be able to accomplish the exact same thing through titling or some other beneficiary designation that would materially do the exact same thing and they cost nothing.

Rachael Sampson:
That's great. And so, another question we got is, is there a particular age when you should start working with a financial advisor? And then we also got the comment of why is it so hard to find someone that can listen, connect, and focus, like we discussed with a financial planner. I'll shoot that over to you, Dennis, as you have to recruit and manage teams of financial advisors.

Dennis Andres:
Well, the candid answer is most financial advisors are paid in a way that has them focused on assets. I mean, that's the God's honest truth about the industry and certainly, I wouldn't be listening you if I didn't answer a problem with that. I think it's when you're considering somebody, I think it's important to see, where your assets land in a conversation.

So, for instance, when I'm coaching my own advisors or when I'm recruiting, I usually have people take me through what their discovery meeting looks like. And so typically, when I was working as an active financial advisor, I wanted to know about your family and your careers and your lifestyle and future goals and timing. Then I would like to know about what planning has been done, not necessarily from a financial perspective, but legal work: do you have a will, living will, powers of attorney, health care directive, trust work, et cetera. What professionals or significant advisors do have: CPAs, attorneys, coaches, friends, whatever. Then I want to know what your legacy goals are - whether they're living legacy goals or future legacy goals and I want to know those things and understand them before I ever ask, about any of your assets. The last kind of thing that I would typically ask about: your home, real assets, real estate, investment properties, accounts, types of accounts, what your savings strategies are, etc. Because if I don't understand who you are as a person; what your family looks like; how you got to where you are; what things you are proud of; what things you would change if you could snap your fingers. “What's most important to you in the world?” is a great question to understand and get some insight into a person's priorities and about what things are important then I have no business talking about your money.

That's my own personal opinion, but it's, I think a fair way to evaluate where your financial advisor’s or your potential financial advisor’s priorities are themselves in dealing with you. So, it is hard to find somebody like that. But I think that that's a good starting place. And if you really like someone personally, and they didn't start that way, take control the conversation yourself and say I am going to share as much as I can about my financial situation. I think it's important that you first understand who I am; what my goals are; what my family looks like; what things we've done or gone through to get where we are; and where we are coming from an organizational or planning perspective; and what actual goals we have before I start to share that with you, right? The truth is money is an incredibly intimate subject and if it if the discovery has been done properly, as an advisor, I can look back at a couple and ask them. First thanking them for how much they've been forthcoming with their personal information and rattle off, you know, you've been married for 37 years, and you guys met at a college frat party and got married two years later; and you have 3 kids, and you're most proud of the fact that they're all independent and have successful careers and you guys pay for them to get through college without debt; and you want to retire in 4 years and 7 years, respectively, whatever; you have gotten a state work done previously, but your youngest is 22 and your estate docs are 10 years old, which means that at least one of your kids was of minority age status the last time they were updated, right? So, my point is that I know things probably more so than anybody outside that room. Maybe more so than your kids, your siblings, your parents, your best friends and so it's a very intimate conversation. So, one, they have to be respectful of that and thank you. And two, that’s your story. So, it's important that you own it. And if you're not getting that, say so. And if they don't change, or they're not going to give it to you, look elsewhere. Sometimes that's within the same organization. If you like the same bank or the same financial provider, but you don't like the service you're getting – it’s your money. It's your life. It’s your sustainability. It’s your success that’s at risk by not getting what you need, does that make sense?

Rachael Sampson:
Yes, it does.

Dennis Andres:
I don’t know that it’s helpful to the person that asked the question, but…

Rachael Sampson:
I think it goes to the empowerment. To understand outside of these financial plans and as we see dollars on paper that there are real lives and loved ones behind those numbers, and that there are real implication for you, and for your loved ones, potentially, for generations to come.

And so, Nancy, another part of that question was about, is there a particular age when one should engage with a financial planner? Is there an ideal time when someone should look at that?

Nancy Anderson:
For someone's more of a late starter and it's specifically, for retirement, you want to start talking to a planner 5 years in. But, ideally, it's right through from the get-go. I gave you the like, 4 different types of financial advisors. So, starting out if someone can save 10% of their income from the get-go. So, if your very first job, if you start saving 10% of your income, you weren't used to making that money before, right? You'll never miss it and then you'll pick up a match the whole time. So, if someone starts out saving right away and working with a planner, they should have no problem being able to retire as early as possible, but definitely within 5 years of your retirement date.z

Rachael Sampson:
Perfect and the audience is absolutely saying that this information has been so helpful, but I also do want to apologize to the audience. I am a little bit under the weather. So, my apologies for being, on and off camera there. But as we talk about that, you know, I want to let everyone know that this will absolutely be recorded, and it will be sent out through our Key Certified Advisors for Key4Women, as well as in our monthly communications to our members of Key4Women, so be sure to check that out on the recording for those that would like, to revisit some of the topics that we talk today.

So, the next thing I want to talk about is, Nancy, I'll stay with you for a second and say, what's your best advice for a single parent and/or empty nesters who may need to supercharge their retirement savings?

Nancy Anderson:
I have some advice and you might laugh, but I'm completely serious. And that's to make more money. So, I mean, there, if there's more dollars coming into the household, it is going to be easier for you to carve out money to save. So, some ways that you can do that are if you're an employee, then you can look to your employee benefits, like tuition reimbursement. Picking up an advanced degree that the company can pay for, or a certificate. And if you look around and determine what are the best salaries for the people that are in your cohort, then move toward that, it can make a big difference. Your base salary is the key because your bonus and your profit share percentages are based on your base salary.

The other thing to look at is what particular jobs pay executive compensation or your stock options, stock units, that kind of thing. That's what helps create wealth for people that are employees. And business owners, of course, they're investing in their business. But I think - make more money, and then when you do make more money, don't spend more, carving more out for savings. And that can make a difference in closing the gap – single, empty nester, or any of us.

Rachael Sampson:
That's awesome and very encouraging. Let's get after it.

Nancy Anderson:
Do some research and then get after it. Absolutely.

Rachael Sampson:
So we've got a couple of minutes left and as we talk about, in these last couple of minutes, I want to first say, thank you to you, Dennis and thank you, Nancy for sharing your expertise. And for all of you out in the audience for joining our program today, of course, we want you to be a member of Key4Women if you aren't already. And if you aren't please visit our website at key.com/joinK4W. Again, that's key.com/joinK4W and feel free to reach out to a banker near you or visit our website at key.com/women to learn more.

So, as we wrap this up, I want to give you both two minutes for final thoughts. And think about what often gets overlooked and what are your final parting thoughts if you could give us that two minutes, we appreciate it.

Nancy Anderson:
So, a couple of things, I think, one that we talked about education and knowledge gap. So, one thing that we all should know is the tax treatment of our investments. Every investment that you may should have a goal that you need to understand the tax treatment. It's taxed at your regular, ordinary income. It's taxed at capital gains tax treatment and what's tax free. The Roth IRA like when you take the money out. So that is something that's you can easily find out and understand.

And then the other thing is, Dennis mentioned that that women are living to age 81. We hear the story of that life is short, buy the shoes and it's cute, right? And go buy the shoes or whatever. But life is not short. Life is long. You're going to invest for your whole career, and then retire at 60 and then you're going to live to 81 or 90. So, any tweaks that you make now by saving a little bit more, investing in a way that gives you a little bit higher return. Maybe working one year longer doing that tuition reimbursement program and making a little bit more and engaging a financial planner. You do those things it can make a huge difference in the long run for your retirement sustainability.

Rachael Sampson:
I love that. And, Dennis, we’ll end with you.

Dennis Andres:
I'm going to say that if you're on this phone call you, you're amazing. Simply because the truth is, you care about your future, right? You worked hard enough to think that this is important and that there's something better out there. So, own that, right? Go ask for the raise. Stand up for yourself. Be in power and there's literally no downsides to you asking for more money. If the answer is no, that's okay. Say, well, how do I get more money? What do I need to do? What are the, what are the, the benchmarks that I need to achieve to move up, get promoted, get a raise, et cetera. Right? So, recognize how strong you already are and muster the courage to go stand up and be recognized. I think that that is really important.

Nancy alluded to the fact that base salaries are so impactful because they impact everything, right? So, if you're getting a percentage for your 401(k), a percentage for your bonus target, percent raises, et cetera, the higher your base pay is the higher all of those numbers are and the better off you are in the future. So, that's a double-edged sword. So, I'm going to add one more thing in there - be cognizant of lifestyle creep. As your salary goes up, it's okay to make your lifestyle a little bit better and do some things that you want and kick off some of those wants and wishes, but at the same time, make sure that you are incrementally increasing with parity, with equity, what you're saving, because as that lifestyle increases, so does your goal.

And so, it's important to understand how valuable you are, and to ask to be compensated fairly, but also, be responsible with that power.

Rachael Sampson:
I love that and I love all of the antidotes and of course understanding how strong you already are, so we're going to leave it there. Thanks again, Nancy and Dennis, for the conversation. Again to our audience - thank you for being here and look out for the recording to come. Thanks again. Have a great rest of your day.

Join Key4Women® and our wealth management experts from Key Private Bank to learn the retirement savings gap factors for women and how you can act today to plan for a more financially secure retirement.
 

  • How to mitigate for the retirement savings obstacles common to women
  • The importance of financial acumen
  • Retirement planning checklist and the actions needed to achieve your retirement goals

Speakers:

Nancy Anderson
Nancy Anderson

Nancy has over 25 years of experience providing sophisticated financial solutions to individuals, business owners and families. Prior to joining Key in 2014, Nancy served as director of a financial advisory firm, providing retirement planning solutions and tax advice for executives of Fortune 500 companies across the country. Nancy received her undergraduate degree from the University of California, Davis, and is a Certified Financial Plannertm certificant (CFP®).

Andres Dennis
Dennis Andres

Dennis Andres is the Key Private Bank market manager for Northern Indiana/Southwest Michigan. Dennis has worked in personal finance for over 13 years and most recently served as senior manager, wealth management for TIAA and he was an advisor for Morgan Stanley. Prior to working in finance, he worked as a consultant and was formerly on active duty in the Marine Corps.

The information contained herein has been obtained from sources deemed to be reliable, but it is not represented to be accurate, complete or objective. Viewpoints in the list of resources do not necessarily reflect those of KeyCorp.

Key.com is a federally registered service mark of KeyCorp.

Key4Women is a registered trademark of KeyCorp.

KeyBank Member FDIC.

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