Joe Lucey

The economy has grown, in large part, because consumers are spending more money. It remains to be seen whether that trend will continue as more of the massive baby boomer generation approaches retirement.

Even before people retire, many tend to slow down their spending habits. Part of this is lifestyle driven; by age 50, most consumers have bought a home, furnished it, sent their kids off to college and are reining in their household budget.

The highest years for earning often come just before retirement but that’s also the time with the least amount of growth in income. According to studies conducted by the Federal Reserve Bank of New York, young adults see the fastest income increases. Those increases slow mid-career, and by the time we’re in our 50s, our hard-earned salaries could represent negative real wage growth.

Given little to negligible income increases during the latter stages of a career, it is more likely older workers are saving their money for retirement — not pouring it back into the economy. Recent research revealed that 80 percent of baby boomers are cutting back on how much money they spend. Among them:

• 54% reduced discretionary expenses
• 47% reduced recurring monthly expenses
• 35% have created and maintain a household budget

The Congressional Budget Office reports that once the majority of baby boomers retire, government spending as a percentage of GDP will likely increase by another 9 percent due to the jump in entitlement benefits.

Not only will baby boomers likely be spending less as they age, many will continue to work. However, the mix of jobs available to older workers is changing as well. Over the past 26 years, 30 percent of manufacturing jobs have been eliminated, while service-oriented jobs in the education and health care fields have doubled.

 

Every year, the World Economic Forum updates its Global Gender Gap Report, which measures gender disparity across 144 countries and tracks this progress over time. The report pays special attention to the gaps between women and men with regard to health, education, economy and politics.

Although the corporate “glass ceiling” has been broken by a growing number of women, the 2016 gender gap report shows that progress is slowing down for working women both in North America and Europe, while the Middle East and North Africa regions showed the most improvement. The report projects that:

• Western Europe will close the economic gender gap in 47 years
• Latin American and the Caribbean are on tap to close the gap in 61 years
• South Asia may not reach parity for another 1,000 years
• North America has been moving backward since 2006
• At the current pace, it will take approximately 158 years to achieve gender equity in America

One of the high-growth industries that lacks female participation is technology. Although women comprise about half of the U.S. workforce, they account for less than a third of employees at technology companies. 

For decades, educators have tried to reverse this trend. In fact, the number of women studying computer science in college rose to 37 percent in the 1980s, but that number began declining in 1985, and in 2013, women accounted for only 18 percent of bachelor’s degrees in computing. Further, after gaining employment in the field, more women than men are likely to leave. One reason for that is they feel isolated and don’t have the support networks that men have.

Even Melinda Gates, wife and former Microsoft colleague of Bill Gates, has admitted that early on in her career she had doubts about continuing to work in the tech environment day in and day out — observing, “I felt like I had to be argumentative all the time.” It’s not that she couldn’t do the work, but the caustic nature didn’t suit her personality, and she felt there were better ways of getting the work done.

According to the 2017 Global Information Security Workforce Study, 51 percent of women in the cybersecurity industry say they’ve experienced some form of discrimination at work, while only 15 percent of men experienced discrimination. The women surveyed reported unconscious bias (87 percent), tokenism (22 percent) and outright discrimination (19 percent).

Gender discrimination doesn’t harm just women; it’s also bad for business. According to a study by the Peterson Institute for International Economics, having more women in top-level positions correlates with increased profitability. However, the research finds no evidence that, by itself, having a female CEO is related to increased profitability. Stephen R. Howe Jr., U.S. chairman of the study’s sponsor, EY, remarked, “The impact of having more women in senior leadership on net margin, when a third of companies studies do not, begs the question of what the global economic impact would be if more women rose in the ranks.” 

We also are potentially losing out on scientific discoveries and innovations. An academic publisher, Elsevier, conducted a study that found that less than 25 percent of research papers on subjects related to the physical sciences were published by women. It’s possible that we are failing to take full advantage of the scientific brainpower of half of the world’s population.

All of this underlies the necessity for women to have a separate and distinct retirement income plan, even if they are married. With more time out of the workforce, less pay and less opportunity to save and invest for the future, women need to plan for multiple sources of retirement income that are not dependent on spousal benefits. We can help you develop strategies through the use of insurance products for retirement income, both as a couple and with either spouse as a survivor. Please feel free to contact us to discuss how we can help.

 

Have you ever contemplated retiring abroad? There’s a lot to think about!

To name a few:

1. Location
2. Health Insurance
3. Tax and Financial Needs

Read more in this 8-Step Checklist then contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.