What Baby Boomer Women Need to Know About Their Finances

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I recently had a nice chat with Gary Foreman from The Dollar $tretcher.  We realized that we both share a similar goal of helping Baby Boomers prepare for retirement.  Gary’s been a blogger since 1996 and is teaching me some interesting things.  He was gracious in sharing one of my articles on his site.  In return, he’s guest posting on my site this week while I take a few days off to get my fishing line wet.

In today’s post, Gary interviews Janet Lombardi, a published author who faced the horror of having her husband empty all of their financial accounts without her knowledge.  While her husband went to prison, she survived and teaches people how to learn from her experience.  I’m honored to be able to present this guest post from two real experts in the field.


What Baby Boomer Women Need to Know About Their Finances  

by Gary Foreman  

If you’re a lady baby boomer, you’ve probably spent the last 30+ years navigating a brave new financial world, a world that your mother never concerned herself with. That trip has taught you many things about money, but there are still things for you to learn.

To help us find out what baby boomer women need to know about their finances, we contacted Janet Lombardi. Ms. Lombardi has written for Salon.com, Newsweek.com, LI Newsday, and many others. Her first book is Bankruptcy: A Love Story (Heliotrope Books). You can read more about it on her website at JanetLombardi.com.


Q: What’s the most common misconception that baby boomer women have about their finances?

Ms. Lombardi: Like many people, baby boomer women may feel that others are more qualified than themselves to handle their finances, that managing finances is not for them, that they’re not good at it, or that finances are not their strong suit.

It's all nonsense. No one is more qualified to handle your finances than yourself. Click To Tweet

The truth is if you can add and subtract, you can manage your finances. You can ask questions. You can educate yourself. No one knows your needs better than you. As I wrote in my memoir Bankruptcy: A Love Story, I believed I would always “be taken care of” until I realized the only person who would take care of me was the person staring back from the mirror.

Baby boomers may also believe that somehow the finances will take care of themselves. It requires time, attention, and commitment. If you want to get a better handle on your finances, commit to it!

 

Q:  What steps are necessary for women to get a clear picture of their financial situation?

Ms. Lombardi: Simple. Get numbers on page. Use old-school paper and pencil. What do you own and what do you owe? Then, gain a deeper understanding by breaking it down item by item. If you have debt, for example, what are the details? Which credit cards? What’s the rate of interest? What’s the balance? When are payments due monthly? Then tally the good stuff. What are your assets? Home? Car? Savings? 401K? Same questions. What are those assets yielding? What is the term (i.e. how long you will be invested)?

 

Q:  Are there any tell-tale signs that your spouse is being financially unfaithful?

Ms. Lombardi: Yes, there can be. A spouse who won’t discuss money or won’t sit down for review of finances may be hiding damage.

A partner who won’t show you the bills/statements or who stalls in sharing the hard evidence may be committing financial infidelity.

A spouse who scrutinizes your spending but won’t discuss what his or her own habits may be deflecting attention.

If you are still receiving paper statements, a spouse who won’t open or who pitches mail or statements into the garbage unopened may be hiding information.

If you suspect your partner is being unfaithful financially, insist on full disclosure. Be brave. You can’t fix what you don’t know. And heed the red flag if you can’t get full disclosure. Don’t ignore your discomfort; a bad financial situation rarely gets better on its own.

 

Q:  Often parents have trouble seeing their children clearly. If your adult children need financial help, how can you make sure that you’re seeing their situation clearly?

Ms. Lombardi: A parent can never make sure they’re seeing their adult child’s financial situation clearly. We’re dealing with adults and adult children cannot be treated like children. So it is not your job to oversee his or her financial situation. It would be preferable to get a snapshot of their finances if they are struggling, but you can’t force anyone to reveal personal finances. You can, however, decline to help if the adult child refuses to share his or her financial picture. Not as retaliation or threat, but because you can’t invest in someone or something without full understanding of the financial picture.

If you decide you can and want to help your adult children financially, decide whether you are gifting money or lending money. If lending, have a clear-cut proposal. Know the sum you are lending and how it will be repaid. How long will the repayments last? Will you charge interest and at what rate? Go into this exchange with a signed agreement, even if it’s just a letter you present. This way, everyone knows the value/responsibility of the transaction. Taking the emotion out of the exchange at the outset may save you heartache later.

If you are gifting money, then treat it as such. Don’t gift and then scrutinize. If your adult children asks for financial support for a particular expense (let’s say a grandchild’s preschool), then consider paying the school directly.

Remember that giving a gift or a loan is a choice based on one’s own financial health. In other words, don’t lend or give money that you don’t have or can’t afford. That is counter to your own self-care. Don’t lend or gift to adult children out of guilt or need to sacrifice everything for your children. Adult children have their own choices to make and enabling them or encouraging dependence on you doesn’t serve anyone.

 

Q:  What do boomer women need to know about debt to avoid troubles once they’re retired?

Ms. Lombardi: If possible, pay off debt before retiring. This way, you are entering into this phase of your life on healthy financial footing. If you are rebounding from a financial hole or want to wipe the slate clean, consider the seven steps to financial rebound I list on my website:

– Step 1: When disaster strikes, don’t just sit there.
– Step 2: Know what you own and what you owe.
– Step 3: Stop debting. Cash can turn your life around.
– Step 4: Create a spending plan and stick to it.
– Step 5: Tackle money problems with a punch list.
– Step 6: Be bold with your money moves.
– Step 7: Ask for support.

If you have substantial credit card debt carried over month to month, as you enter retirement, the most important step is Step 3: Stop Debting. You will never get out of debt, if you keep debting!

Begin taking steps now to a debt-free retirement! Read other tips for baby-boomer woman in today's post! Click To Tweet

 

Q: Not all financial advisers are trustworthy. Are there ways for boomer women to be sure that the advice they’re getting is solid?

Ms. Lombardi: As in all professions, there are good professionals, mediocre ones, and crooks. Trust your instincts, and if something seems too good to be true, it probably is.

When dealing with a financial adviser or anyone who assists with your money, you need to have financial awareness. Your finances are your own, so ultimately you are the person responsible for how they are treated. Take responsibility!

Ask yourself, What/how am I investing? What’s my goal/purpose? And most importantly, how is my financial adviser getting paid? Fee-based? Commission-based? Often, the fees are hidden, as is the case with many mutual funds. So it’s your job, as a person who takes care of herself, to investigate what those fees are by reading the prospectus. A trustworthy financial adviser will answer all questions openly and honestly, in writing, and will act as fiduciary. She or he will meet with you regularly to review your accounts. And will explain anything you don’t understand, even if you need to ask more than once. It’s smart to ask questions.


Gary Forman is a former financial planner who founded The Dollar Stretcher website and newsletters in 1996. The site features an active section for Baby Boomers.   Gary has been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com

 

 

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6 comments

  1. One thing I wished I’d done before hiring a financial advisor was to sit down and make a list of the reasons I wanted to hire one–what job I wanted him to do and what I thought, off the top of my head, that job was worth to me. Now, I’m not sure I would have been able to find someone to do that job for that amount of money but what I wanted was someone to:
    1. Look at our current investments and savings rate and tell us if we are saving enough to meet our goals, and if not, how much more we need to save.
    2. Tell us about the options available to provide finanical security for my handicapped son once we are gone, and let us know the costs and advantages/disadvantages of each
    3. Advice about which tax-advantaged retirement plans were best for us. Do we put more money into 401K or should we put in in an IRA or Roth instead?
    4. Asset allocation advice. Given the situation with our son, are the standard asset allocations given on most websites appropriate? If not, what do you suggest How do we coordinate our taxable and non-taxable accounts?

    I think the services I wanted would be amenable to an hourly rate and I have no problem paying someone $200/hr for such a plan, figuring it would cost about $1,000 the first year and maybe $500/year thereafter. Instead I got a mutual fund portfolio which has underperformed the market, an AUM fee and no real advice about what I needed to know.

  2. RAnn, sorry to hear about your bad luck with your financial advisor. It may be worth taking another look, and pulling your funds from your current advisor. It’s not worth paying an ongoing Asset Under Management (AUM) Fee if you’re not getting the service you need.

    I’ve got a link to Paladin Registry on my resource page, you may want to enter your information there to interview some new advisors (I don’t get any compensation from Paladin, just believe it’s a good tool to screen advisors). Good luck, keep me posted on your progress!

  3. Great information. We are GenXers, but I think the same rules apply. My wife and I manage most of our finances together. She understands investing, but is not very interested in the details. I would like to find a good financial advisor to help my wife in case I passed away first. I would like to have her use a company like Portfolio Solutions.

    1. Dave, good for you for managing your finances as a team!! My wife isn’t as engaged, but she knows where everything is. For ~5 years, I’ve written an annual “Love Letter” with all of our account information, passwords, etc. We’ve also agreed that if I were to get hit by a bus (or fall off a roof…) she’d call Vanguard Personal Advisory and have them take over. Same idea as yours, and I think it makes sense to have a “professional” pre-identified to ease her transition. Thanks for stopping by!

  4. Lots of great advice here.

    We just listened to a Stacking Benjamins that mentioned an article about a woman being scammed out of close to $1M by a man on an internet dating site. She was a bit older than a boomer but the same warnings apply VERIFY, VERIFY, VERIFY and don’t trust just anyone with financial information.

    This is a horrible current story about a NY judge who was scammed by someone pretending to be her real estate lawyer. Crazy!

    1. I heard the same. Absolutely AWFUL. I was a bit concerned posting this, thinking some sensitive types may take offense to the title as “sexist”, but I decided to do it because it’s an important message that needs to get out.

      Too many spouses (man or woman) aren’t engaged in the family’s finances, and it exposes them to risk. I’ll check out your real estate lawyer link, sounds sick.

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