A Special Note to Women: Part 1

By: Tom Hegna CLU, ChFC, CASL

While we all face risk with our retirement income, overall, women are subject to more financial risks than men, especially in their later years. Women have several unique challenges, including an average longer lifespan than men.

“The average woman on the planet can expect to live about five years longer than the average man.[1]

Despite the retirement challenges women are facing today, there is a silver lining! There are a number of ways for women to overcome the various financial challenges and achieve the optimal amount of income for their retirement. By identifying the risks, educating themselves about the risks, and learning how to work around or eliminate these risks, women will be able to clear those retirement hurdles with ease. Let’s take a look at five significant hurdles, highlighted by financial economist Dr. David Babbel that impact women’s retirements today.

“Five forces are converging upon Americans today in what some have called the Perfect Storm, and it is about to engulf us from all sides. The situation is particularly precarious for women (…) The best we can do is to organize our own finances in such a way that we can provide for ourselves and our families.”

  • “Decreasing rates of return on their Social Security contributions”
    • averaging 1.8 percent per year for single women
  • “The accelerating demise of defined benefit pensions”
    • 150,000 pension plans, which would have provided lifetime income security, have been discontinued since 1983, leaving less than 25,000 plans today, many of which plan to close within two years.
  • “The transition of the baby-boom generation into retirement”
    • the first boomers reached retirement eligibility in 2006 and will continue to enter the retirement ranks over the next 20 years, creating a huge cash drain on our Social Security system
  • “Longer expected lifetimes”
    • 65-year-old women have added another 4 years to their life expectancy since the 1960’s; over the past 160 years, women in the most developed countries have steadily added another year to their life expectancy for each four years that pass
  • “The much smaller post-baby boom generations who are being asked to support boomers’ unfunded benefits along with their own healthcare and retirement needs”
    • And owing to their greater life expectancy, women’s benefits will be much costlier to fund than men’s, all other things equal[2]

In addition to these points highlighted by Dr. Babbel, the U.S. Department of Labor has found that women are more likely to work in part-time jobs and therefore do not qualify for an employer-sponsored retirement plan. Their statistics show that, of the 62 million wage and salaried working women between the ages of 21 and 64 in the U.S. today, there are only about 45 percent who participate in a retirement plan—45 percent!

And even for those women who do actively participate in a retirement plan, they are more likely to contribute much less and, thus, have a lower amount of overall savings, due in large part to the fact that they are more likely than men to interrupt their working years to raise children and take care of aging parents.

Now that we have identified the hurdles and understand the different risks that are plaguing women today, what are the solutions? Stay tuned to next week as I will discuss how Fixed Indexed Annuities can offer some potential solutions for women in retirement.

[1] Nigel Barber PhD, “Why Women Live Longer Than Men: It’s All About Risk Management,” The Human Beast, August 10, 2010, https://www.psychologytoday.com/blog/the-human-beast/201008/why-women-live-longer-men

[2] David F. Babbel, “Lifetime Income for Women: A Financial Economist’s Perspective,” Wharton Financial Institutions Center Policy Brief: Personal Finance, July 31, 2008, http://fic.wharton.upenn.edu/fic/Policy%20page/RetirementIncome-Women.pdf

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7 Retirement Tips for National Save for Retirement Week














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It’s Time to Close the Retirement Savings Gender Gap

(This blog first appeared on National Life Group’s blog, which you can view here.)

Women earn 78 cents to every dollar that men earn, according to the U. S. Department of Labor. That’s 23% less than their male counterparts. On top of that, the 2010 U.S. Census reports that 42% of all women lack financial security.

Susan Jennings is passionate about changing those statistics. Susan is Senior Legal Counsel for National Life Group and Executive Committee Member of the Indexed Annuity Leadership Council. She has been with National Life for 29 years. Since her days in law school, she has been an advocate for women’s professional development and has been a proponent of breaking down gender stereotypes.

Susan sat down to give a sneak peek of the topics that will be covered during the panel discussion, The State of American Retirement: Navigating the Gender Imbalance on October 15. Susan will join other influential financial and retirement experts in Washington D.C. to discuss ways to bridge retirement’s gender disparity so that all women are aware of how to prepare for a secure retirement.

What are some of the key gender imbalances related to financial planning and retirement?

Overall, women have saved far less for retirement than their male counterparts, and these same women are likely to live longer and actually need more to provide for their retirement needs. As the American population ages, we find that more and more women who had lived comfortable lives are entering poverty or near poverty in their retirement years.


Why is this the case?

Generally, women have less awareness about financial topics and defer financial decisions and responsibility to their spouse. This is particularly true in households where men are the primary breadwinner, but even in families where the woman is the primary wage earner, financial decisions, particularly decisions related to long-term retirement planning are often left to men or are left unaddressed completely. In many cases single-women, particularly single-mothers, feel the pressures of meeting daily expenses and don’t prioritize the importance of long-term saving. In fact, often times during divorce settlements women are primarily concerned with ensuring immediate care of the family and don’t even address the issue of dividing retirement assets.

It sounds like a large and significant problem, what can be done to change the situation?

It is a significant problem, and that is why we are convening the panel discussion to address the situation. We want women to be aware of the choices and options that are available to them and we need our legislators to know that retirement plans should not just allow employees to accumulate funds for retirement, but should also provide a determinable amount of income for the rest of their lives.


What are some of the things women can do today to shift the tide?

Well, one of the things that we can all do is make financial literacy and long-term saving a part of the dialogue with all women beginning with young girls. It is never too early to start talking about planning and saving for the future and it is never too soon to start learning about the tools that are available to make saving for the future possible. And I’m not talking about reading the Financial Times and Wall Street Journal, I am talking about using the many, many resources that are available on the Internet that are delivered in simple straight-forward language that are easy to understand and digest.

There are so many great blogs available for women to follow, that offer financial information from every perspective—be that of a young professional just starting out, to a stay-at-home mom, to a working mom trying to juggle family and career, to a single parent trying to live and save on one income. There are stories that every woman can relate to and identify with, and this is the type of conversation and information that needs to be shared so that every woman can understand that saving and providing for her future is and should be within her own power.

Additionally, there are online calculators and resources that can help people budget and determine how much they need to save in order to meet their retirement goals.

If you could provide women with one piece of advice related to retirement planning and saving, what would it be?

The single best piece of advice related to retirement saving is the same for everyone, whether women or not: save as much as you can, as early as you can. Start saving from the time that you get your first paying job—even if that is in your teenage years, it will form the habit of saving for the longer term and even small amounts can turn into something substantial over time. Specifically for women, the amounts they can save early in their career will really make a difference if they decide to take time out of the workforce in order to care for children or family members.

Additionally I would advise women to be aware of their risk tolerance. The prevailing message out there is that mutual funds and stock market-based investments are the best way to accumulate long-term growth. Women have inherent needs for security and stability, and need to be mindful that the aggressive ebb and flow of the market may not be the most palatable way to build their nest egg.

There are many other conservative savings and investment options to choose from, including fixed indexed annuities, which can provide upside interest potential in a positive interest rate environment but still provide protection of principal and guarantees when the markets are negative or volatile.

Join Susan Jennings at The State of American Retirement: Navigating the Gender Imbalance.

Securities can be offered solely be representatives registered to offer such products through a broker/dealer. Financial planning and investment advisory services can be offered by investment adviser representatives through a registered investment adviser.


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4 Small Ways to Save Big

When it comes to saving for retirement, starting early is key. And while putting money away can seem like a huge and daunting task, it doesn’t always require major lifestyle changes. If you implement changes slowly and in small ways, you may not even realize how much you’re saving.

Here are 4 small ways you can make a big difference in your savings account:

1. Pay off your credit card on time. Waiting to pay off your credit card bills is a great way to accrue interest and lose money in the long-run. Instead, pay your credit card bill on time and put that extra savings towards your savings fund.

2. Set up automatic transfers. While it’s easy to promise yourself that you’ll transfer money to a savings account each month, it’s helpful to set up automatic transfers so that you aren’t tempted to spend the money.

3. Save your change. Cents turn into dollars quickly! Additionally, you can sign up for a savings program like this one, where everyday purchases made with your debit card will be rounded up to the nearest dollar amount, and the difference will be transferred from your checking to your savings account.

4. Have a plan. People who create concrete retirement plans are more likely to stick to them and on average, end up with three times more money than those who fail to create a plan.



Creating a secure retirement takes careful planning, and it’s never too early to start saving. Use our calculators to determine how much money you should be saving now to make sure you have a balanced financial plan and the lifetime income you’ll need.

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Teacher’s Retirement Q&A on Fixed Index Annuities

Teachers are among the hardest working professionals and have the unique responsibility to prepare our younger generations for the future. And, as educators across the country go back to school for another year, it’s a good time to give some thought to what life should be like for teachers once they’re outside of the classroom and on to retirement. That’s why we created a useful Q&A for teachers who are planning for retirement and how a Fixed Index Annuity (FIA) might be a good product to add to their portfolio.

Q: What is a Fixed Index Annuity and why should teachers consider one?

A: A Fixed Index Annuity is an insurance product that offers a benefit that provides an opportunity to receive a steady, guaranteed lifetime income stream at a future date like retirement while protecting the principal from the uncertainty of market volatility.

As a teacher who has depended on regular paychecks for years, a Fixed Index Annuity will let you continue to receive regular payments, allowing for a dependable and secure stream of revenue throughout retirement.

Q: Are FIAs a good product for teachers?

A: They can be. But, like any savings vehicle, a consumer should conduct thorough research and talk to their insurance agent to determine if FIAs are right for them. The beauty of an FIA is that its value will never decrease – it only has the potential to grow. Therefore, no matter the unpredictability of the market, you can be confident that your premium payments are secure. What’s more, annuities offer tax-deferred growth, which enhance the long-term value of the annuity.  Of course, taxes are paid at the time payments are made to you from the annuity.

Q: Don’t I stand to receive higher returns from other products?

A: It’s certainly possible. There are a number of products that may result in higher returns – but with a greater reward often goes a greater risk. FIAs should be considered in the context of a wide, diversified portfolio. They stand as conservative, dependable option that can give retirees confidence as they leave jobs and careers that have long provided regular incomes.

Visit FIAinsights.org for more information and check with your financial professional to determine if a fixed indexed annuity is right for you.

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Beware of These Four Retirement Pitfalls

With average life expectancies increasing, it is critical to have a thorough retirement plan that provides for adequate income to last a lifetime. To make sure your income lasts as long as you need it to, here are a few retirement pitfalls to avoid:

  1. Not Saving Early Enough. The earlier you start saving, the more likely you are to have enough money to last you a lifetime. Even if you can only contribute a small percentage of your income each year, it’s better than nothing.  These calculators can help you see how much you should be saving given your age and your retirement goal.
  1. Underestimating How Long You Will Live. It’s important to take into consideration that people are living longer, so the more you save, the better. Forty-eight percent of pre-retirees reported that their longest living family members reached age 91 or older, so remember to save accordingly to ensure having money that lasts as long as you do. As you approach retirement, it may be time to look at products that offered guaranteed lifetime income like Fixed Indexed Annuities.
  1. Lack of Balance in Your Portfolio. It’s important to have a balanced and varied retirement portfolio in order to reduce risk. One common pitfall is relying too heavily on one savings vehicle – it will be difficult to obtain consistent growth if your portfolio lacks diversity. For example, one product that can nicely supplement a 401(k) is a Fixed Indexed Annuity (FIA), which protects your principal from the uncertainty of market volatility.
  1. Not Taking Into Account Healthcare Costs. No matter how hard you try to predict your expenses during retirement, the rising cost of healthcare has the potential to add financial stress to your golden years. According to data from the Employee Benefit Research Institute, a 65-year-old married couple with average prescription drug expenses is projected to need $241,000 in retirement savings to have a 90 percent chance of covering their healthcare expenses during retirement. That being said, it’s important to assume high healthcare costs during retirement and plan accordingly.

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5 Things You Need to Know About FIAs

5 things you need to know about FIAs








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Millennials say they want to save for retirement, but a third aren’t doing it

Nearly one in three millennials have no money saved for retirement, and a quarter of millennials – people between the ages of 18 and 34 – report owing more money than they have currently saved, according to a survey released by the Indexed Annuity Leadership Council (IALC).

“This year, millennials finally surpassed all other generations and now make up the largest share of our workforce, which makes it so concerning that such a large portion of these young people are astoundingly unprepared for retirement,” says IALC executive director Jim Poolman.

Still, out of all generations, millennials are also the most open to retirement savings options that protect against stock market fluctuations and offer the opportunity for growth. According to the survey, 52 percent of millennials showed interest in products like fixed indexed annuities that provide guaranteed lifetime income while ensuring the principal investment is never lost.


“It’s no surprise that millennials, who entered the workforce after the tumultuous 2008 economic recession, are showing the most interest in products that can provide certainty against the unpredictability of the stock market,” Poolman says. “This certainty becomes even more important as our retirement landscape continues shifting to a more pay-for-yourself era.”

So, how can millennials with nothing saved for retirement get started?  Poolman has some basic tips:

  1. Remember, every penny counts

When you’re young, you have time on your side, so put as much money aside as you can. This might mean skipping a night or two on the town or packing your lunch more often. While this doesn’t seem like much, making one or two small changes can add up to considerable savings.

  1. Take free money

Consider contributing to your company’s 401(k) plan or any employer-sponsored available plan. Think of any plan your employer is willing to match as “free money.”

  1. Balance your portfolio

As a young professional, you have the luxury to put some of your money into high-risk investments since your retirement is seemingly far away. However, for the safety of your future, it’s important to also consider adding more conservative savings products like health savings accounts or fixed indexed annuities that can provide much-needed balance to your retirement portfolio.

  1. Start now

Don’t wait. It’s crucial to start saving for retirement as early as you can. The earlier you start saving, the more likely you are to meet your retirement goals. Even if you can only contribute 1 percent of your salary, anything is better than nothing, and it can add up quickly.


Check out these calculators to see how much you should be saving (taking into account your age and your retirement goal) and whether your current retirement savings will be sufficient.



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Increased Life Expectancy Leads to a Decrease in Payout Rates

By Tom Hegna, CLU, ChFC, CASL

A lot of people ask me, “Hey Tom, why should I buy an annuity in today’s low interest rate environment?” With current rates being “low,” they may seem befuddled when asked to consider purchasing an annuity. I explain that today’s rates are not low. In fact, I believe these to be the “new” rates—and today’s rates may be the highest rates we could see for a very long time!

In addition, an annuity purchase today is not a play on interest rates.  It is a mortality credit, or as I now call them, “longevity credits,” play. Just like the current rates, these longevity credits could be the highest longevity credits you may see for the rest of your life as well. Let me explain…

Last October, the Society of Actuaries (SOA) Retirement Plans Experience Committee (RPEC) released updated mortality tables that show a consistent trend of increasing life expectancy According to Dale Hall from the SOA, “the purpose of the new report is to provide reliable data that actuaries can use to assist plan sponsors and policy makers in assessing the financial implications of living longer.

Life Expectancy and Mortality Tables (2000 vs. 2014):

  • Life Expectancy of a 65-Year-Old Male:
  • 2000 Mortality Tables: 84.6 Years Old
  • 2014 Mortality Tables: 86.6 Years Old
  • 2.4% increase in life expectancy
  • Life Expectancy of a 65-Year-Old Female:
  • 2000 Mortality Tables: 86.4 Years Old
  • 2014 Mortality Tables: 88.8 Years Old
  • 2.8% increase in life expectancy

With increased improvements to medical technology, I predict that we will see significant additional growth in life expectancy and expect it to rise even greater than the current trends indicate.

These updated tables will require insurance companies to adjust their payout rates in order to properly reflect longer life spans.  Advisors could be in for quite of a shock when they see these adjustments. I’m talking about payout rates going from 14% to 10%, from 9% to 7%, and from 7% to 5%.  These will not be small adjustments!

That’s where income annuities come in. They can offer something that no other product can offer: Longevity credits. Cash flow from an income annuity hails from three different sources: Interest, return of principal and mortality credits. Traditional investments can typically manufacture two of these components—interest and return of principal. However, only life insurance companies can manufacture longevity credits.

When payout rates for income annuities are released with the new mortality tables, you will see the payout rates drop because of an adjustment in longevity credits. Combining the fear of outliving your money and the uncertainty of the market, you should consider locking in these guaranteed rates now as these are likely the highest longevity credits you will see for the rest of your life.

For more information about the author, Tom Hegna, check out: http://tomhegna.com/about-tom/   

To view Tom Hegna’s 2015 Economic Summary, click here.  

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Time for Ferris Bueller to Consider an FIA

Though it may seem unbelievable, Ferris Bueller’s Day Off came out in theaters 30 years ago today (June 11), making Matthew Broderick’s character about 48 years old.

Bueller, Bueller, Bueller? Anyone know how to achieve a secure, and comfortable retirement?

Bueller, Bueller, Bueller? Anyone know how to achieve a secure, and comfortable retirement?

Now, of course we don’t know the career and lifestyle that Ferris and his friends went on to experience after that life-changing day in 1986 Chicago. But, we do know that today, Ferris would be in the latter half of his career, potentially with kids of his own soon going away to college and a growing realization that retirement is not as far away as it was on that June day three decades before.

In fact, Ferris might be more concerned about his retirement prospects than he would let on. A recent Ipsos study found that confidence in traditional programs like Social Security is weakening and that 54 percent of Americans have never spoken with a financial adviser. Even more worrisome, the average American just slightly younger than Ferris would only have $42,700 saved for retirement.

Luckily, Ferris and his friends are the right age to consider a fixed index annuity (FIA). An FIA is an insurance product that pays you income in exchange for a premium. It allows you to enjoy potential growth that’s linked to a market index, while protecting your savings from any downside loss. It can even provide guaranteed lifetime income throughout retirement.

By planning ahead and looking into an FIA, Ferris – at only 48 years old – can take steps to secure a retirement that is every bit as exciting and fun as his time playing hooky that epic day on Michigan Ave.

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