Women & Money: Talking with the old and the young about action plans

​By Julia Anderson

​I’ve been talking, lately, about women and money to both ends of the spectrum -- both older women, and the young.
 
On one end, I shared my short Power Point presentation with a group of 15 women over 60. At least two were in their 90s.
 
Women are not paying enough attention to retirement planning, saving and investing, I told them. And the best thing they could do for a daughter or yet better a 20-something granddaughter is to help them set up a tax-deferred retirement savings account as soon as possible.
 
After 20 minutes of me rambling on, there were nods of agreement and a few questions – one about the tax implications of Required Minimum Withdrawals from an IRA at age 70 1/2. I told her to seek help from a tax accountant. RMD withdrawals are treated as ordinary income but there may be charitable “giving” strategies directly out of her IRA that could reduce her tax bill.
 
Four attendees bought my book, “Smart Women, Smart Money, Smart Life,” and said they would be sharing it with their daughters (granddaughters).
 
My basic points: Women end up with less money saved for retirement but live longer in retirement. Half of American women over age 65 are single, on their own financially.  It is imperative that women take an active role in their retirement planning and investing, early. In their 20s!!!
 
For this presentation, I use my mother, Helen Rose, as the example of the ultimate woman investor…. someone comfortable managing her own portfolio, someone who views investing as easy.
 
Her philosophy? Buy shares in well-run profitable companies that pay a dividend of about 3 percent. Reinvest the dividend money in more shares of that company. Hold over time (20-30 years) and watch the miracle of compound interest (reinvesting dividend money) create wealth.
My mother, a farm wife, died wealthy.
 
The other side of my conversation was with a younger (early 40s) step-niece who has recognized the importance of long-term saving for retirement.

She became enthusiastic about my book, "Smart Women, Smart Money, Smart Life," a couple of months ago, then followed up by email on specific questions about how to open an Individual Retirement Account and how to invest the money inside that account for the long haul.
 
My recommendations: Start an IRA (or a Roth IRA) with an online brokerage firm, make automatic contributions to that account. Invest the money in an S&P 500 stock index fund with low (or zero) management fees. Let the money ride, reinvest the dividends.
 
Never borrow from this fund. Don’t mess with the investment formula, even if markets slump during an economic downturn.  
 
She and her husband have executed on those recommendations. But she also asked about managing short-term savings. That’s a bigger challenge because banks offer almost no interest on savings accounts or certificates of deposit.
 
I suggested buying short-term bonds in the 3-month to 9-month variety, but she will still have to save up a chunk of money to make that worthwhile.
 
For whatever reasons, my message “clicked” with this young working mom who has two young daughters and a professorial husband.

She gets it. Saving for retirement is a big deal, especially if you’re a woman.