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23w o r t h . c o m

t h e N e x t F r o N t i e rn e w e m e r g i n g m a r k e t s

As a woman, what special considerations should I be addressing in planning for retirement?

BMO Private Bank Mary Jo Herseth, CFP®, Senior Vice President and Head of Banking, U.S. Kimberly Bridges, PhD, CFP®, CPWA®, CDFATM, Vice President and Senior Financial Planner

Chicago, IL Leading Advisor

Women differ from men, from a finan-cial perspective, and these differences may impact retirement planning. On average, women live longer, are more likely to provide and receive long-term care and have a lower risk tolerance than men. Such factors combine to increase their risk of running out of money in their later years.

Because women face a greater pos-sibility of running out of money, it is important that they take an active role in financial planning and discuss risk factors with a wealth advisor. An important question is, “Will I be able to fund my current lifestyle and other financial goals if I outlive my husband by a significant period—perhaps a decade or more?”

Women typically do outlive their hus-bands because of longevity and mar-riages to older men. According to a U.S. government report, among those aged 65 and over, women are three times as likely as men to be widowed.1 The aver-age length of widowhood is over 14 years.2 Successful retirement models frequently become unsuccessful by

assuming an early death for the hus-band. Income sources—pension, social security and trust income—often decline or dissolve altogether at death.

Unless expenses are reduced by the same amount, the surviving spouse may need to rely more heavily on her investment portfolio to fund her life-style. If principal is regularly invaded, the portfolio value will decline at an accelerating pace, increasing the risk of outliving assets. This can occur regardless of the level of wealth.

Another factor that impacts a wom-an’s financial plan is long-term care. Many women do not consider how they will pay for such care if the need arises. The median cost of private-room nursing-home care in the United States is $81,000 per year.3 Such costs can hinder an otherwise sound finan-cial plan, leaving a depleted portfolio for the future. That risk is greater if care is needed for an extended period—as with Alzheimer’s and Par-kinson’s diseases. Be sure to discuss this possibility with your advisor. You might choose to purchase long-term

care insurance or plan to liquidate a particular asset—such as a vacation home—to cover the costs. Either way, it is important to prepare.

Many women have a low tolerance for risk and are drawn to low-risk investments, such as CDs, money market accounts and high quality bonds. However, low-risk invest-ments usually earn relatively low returns, which often do not outpace inflation. Over time, inflation erodes spending power. For example, $100 in 1980 could purchase only $39 worth of goods by 2010.4 When plan-ning for a long retirement (a healthy 65-year-old woman has a 40 percent chance of living to age 905), consider investing a portion of assets for growth, to offset inflation and increase portfolio longevity.

Longevity, long-term care and low-risk tolerance are not uniquely women’s issues, but women will more likely experience them. Discuss these consid-erations with your advisor. Planning in advance will strengthen the chances for a more fulfilling retirement.

1 “Women in America: Indicators of Social and Economic Well-Being,” prepared by the U.S. Department of Commerce Economics and Statistics Administration and by the Executive Office of the President’s Office of Management and Budget for the White House Council on Women and Girls. March 2011; 2 Widow Statistics accessed January 22, 2013 online at http://ajourneywelltaken.blogspot.com/2008/01/widow-statistics.html; 3 Genworth 2012 Cost of Care Survey, Genworth Financial, Inc. and National Eldercare Referral Systems, LLC (CareScout); 4 Bureau of Labor Statistics CPI Inflation Calculator, http://www.bls.gov/data/inflation_calculator.htm; 5 Life expectancy calculator accessed through MoneyGuidePro Financial Planning Software, based on Annuity 2000 Mortality Tables.

BMO Private Bank is a brand name used in the United States by BMO Harris Bank N.A. Member, FDIC. Not all products and services are available in every state and/or location.

By Mary Jo Herseth and Kimberly Bridges

BMO_Private_Bank_WOR23.indd 88 3/4/13 2:20 PM

“Women differ from men, from a financial perspective, and these differences may impact retirement planning.”—Mary Jo Herseth and Kimberly Bridges

Mary Jo: Pictures of my family— to remind me what’s important

Kimberly: A scattering of research, presentations and gifts from special people

What’s on my desk.. .

Minimum Fee for initial Meeting None required

Minimum net Worth required $3 million (planning services); $1 million in assets (investment services)

Compensation Method Fixed and asset-based fees

primary Custodian for investor assets BMO Harris Bank N.A.

professional services provided Herseth: Planning and investment advisory services Bridges: Planning services

Website bmoprivatebank.com/us

email [email protected] [email protected]

BMO Private Bank 111 West Monroe Street, 6E, Chicago, IL 60603 312.461.2160 11301 Nall Avenue, Suite 203, Leawood, KS 66211 913.323.1529

BMO Private Bank has over 100 years of experience in working collaboratively to deliver comprehensive wealth management strategies based entirely on the priorities and circumstances of high net worth individuals, families and organizations. Mary Jo Herseth is senior vice president and head of banking, U.S. for BMO Private Bank. She has more than 30 years of experience in the financial services industry. Kimberly Bridges is vice president and senior financial planner for BMO Private Bank. She has over nine years of experience in the financial services industry focusing on the needs of women.

About Mary Jo Herseth and Kimberly Bridges

Kimberly Bridges Mary Jo Herseth

my hoBBIes aRe.. .

Mary Jo: Golf, gardening, reading

Kimberly: Bicycling, reading and spending time with my family

How to reach Mary Jo Herseth and Kimberly Bridges

Mary Jo can be reached at 312.461.2160 and Kimberly at 913.323.1529.

089w O r t h . c O M a P r i l - M a y 2 0 1 3

What makes a good clIent.. .

Mary Jo: A mutually beneficial relationship and having a bit of fun

Kimberly: Someone with whom I share a strong personal connection and whose needs I am able to meet