For many women, retirement planning offers a special challenge, says Holly Kylen, an ING retirement coach who specializes in providing financial advice primarily to women -- many of them in their 50s and 60s.
Many of her clients don't think about retirement until it's upon them. "The reality of what they thought they would need for retirement versus what they have is stunningly in their face," she says.
To avoid nasty surprises, she suggests that her clients take a retirement test drive. She begins the process by helping them create a budget, dividing their current spending into the must-haves -- mortgage, utilities, groceries, insurance -- and the nice-to-haves -- money for hair and nails, entertainment, travel. "When you strip their budgets down, they usually can see that they could get by on much less than they are currently spending," Kylen says.
Next, she helps them add up all the money that they can expect to have for retirement -- Social Security, any pensions, savings, home equity -- and compares that number to the list of must-spends. "We figure out what their retirement is really going to look like -- what their standard of living is going to be."
Then -- while her client is still working and bringing home an income -- she asks her to live for three months on the amount of money that she will have after she retires. Kylen says once a woman has this experience, then she can make adjustments. If she doesn't have enough money, she can delay her retirement or figure out how to work part time or rethink her housing situation -- and do it before she pulls the retirement trigger.
Kylen believes that for many women this is reassuring. "Women are practical. We want to know that our plan is going to work. We don't want to guess at it," she says.
Once the plan is in place, the most common thing women do to mess it up is give more money than they can afford to their adult children. Kylen advises her clients that if they can't say no, let her do it. Bring the offspring who wants money to her office and she'll explain mother's financial situation in all its gritty detail. Seeing the bottom line is compelling.
"I've never had a child look Mom in the face and say, 'Too bad. I need the money. You eat cat food.'"