InvestmentNews, March 31, 2008

By now you are probably tired of hearing that baby boomers are going to
change retirement. The fact is, they are. Yet despite all the talk, the
financial services industry still remains mostly unprepared — largely
because they don’t see how major societal shifts are changing the very
practical financial needs of boomers.

Let’s examine one area where this is particularly the case: the big changes that are taking place among women.

First, some background.

Boomers
are the first generation in which a majority of women have been (or
are) in the work force. In boomer households, 63% of women work.

This will affect retirement in several crucial ways:

A greater voice. Many
boomer women have earned their own money and will decide how it is
spent, saved and invested. Unlike in earlier times, women take part in
a family’s financial decision making, and are often the sole decision
maker.

Even if they don’t work at all or don’t earn as much as
men, today’s women are more likely than those of earlier generations to
be involved with every aspect of the household’s financial decisions,
including retirement.

Woe, then, to the financial adviser who doesn’t include the woman in the household’s financial planning process.

A different retirement.
In the past, when the household head was typically the sole source of
income, the household “retired” when the wage earner retired. With
three-quarters of boomer households having two wage earners in 2006,
many boomer households won’t be “retired” until both earners retire.

Instead
of being clearly classified as retired or not retired, boomer
households are likely to spend many years in a more vague and unsettled
life stage that may be called semi-retirement, revolving retirement,
working retirement, non-retirement, re-retirement or some other name
that reflects a midway stage between full-time work and traditional
retirement.

And while there is no universal term to describe
that in-between life stage yet, there is a word describing two-earner
households where one person retires without considering the other —
divorced.

In households with working male and female heads, the
woman is typically younger than her husband, lives longer and is more
likely to have gaps in her employment history. As a result, women are
likely to remain in the work force after her male partner has retired.

Because of their greater longevity, female household heads typically face more years in retirement than males.

And
since widows are far more common than widowers, the female household
head will require more money to maintain her married living standard
than if she went into retirement after being single.

Gaps in
women’s employment may mean that a woman will stay in the work force
longer than her male counterpart in order to reach the career level for
which she was striving.

All this suggests that boomer women
will want to work for a longer period and will need more money to
maintain their lifestyle for a longer time.

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