Mellody is President of Ariel investments, a Chicago-based money management firm that serves individual investors and retirement plans through its no-load mutual funds and separate accounts. Additionally she is a regular Financial Contributor and Analyst for CBS news.
Tom: Good morning, Mellody! Very important topic today – how American women are set to be disproportionately impacted by America’s retirement crisis.
Mellody: It is true,Tom. This is a hugely important issue, and one that has flown under the radar for far too long, so this morning I want to highlight the challenges that many American women will be confronted with as they prepare for retirement.
Tom: I didn’t realize this was an issue – tell us a little bit about it.
Mellody: The numbers really speak for themselves here. In numerous studies, women themselves have indicated that they are concerned about their retirement outlook across a number of issues. In one recent survey, only 7% of women said they were “very confident” about being able to retire with a comfortable lifestyle, and 43% of women said they expect to work past age 70 or to never retire. another recent survey found that only 29% of retired women have a pension, compared with 50% of men, and over a quarter of women – 27% – who are close to retirement age live paycheck to paycheck, compared with fewer than 1 in 5 men.
Tom: Why are women likely to face more challenges?
Mellody: There are two big reasons for this. The primary driver is that women earn less. We have talked about this before on money Monday, tom, but the fact is that we continue to see a significant pay gap between women and men. and while there tends to be focus on the immediate impacts that pay inequality can have on women – after all women make around 80% of what men make – pay inequality has huge long term consequences in terms of retirement savings. On average, men had $100,000 in their 401(k) plan, compared with women’s $59,300. And the variation in retirement savings holds across all salary levels.
The second big reason that women are facing greater retirement uncertainty than men is life expectancy. In the US, women live longer than men – 3 full years longer, according to the world health organization. Combine this with the fact that married women tend to be younger than their husbands, and that means that these women have to plan for longer retirements, and have to do so with the expectation that they will live alone in their final years. All this means more money, especially because the finals years of life are more costly in terms of health expenses.
Tom: Ok – what can women do?
Mellody: The main way to deal with this is to know what you are up against, tom! If you are not actively engaged in your retirement, or do not know the details, take steps to change that! For all women, this means doing your research, keeping yourself informed about your retirement, and not taking the east path. Another survey found that only 36% of women are comfortable selecting investments that are right for them, compared with 63% of men. So a big piece of this is getting involved in these big decisions that impact you! Be prepared to plan for a longer retirement, to save enough for higher health costs, and remain engaged in your planning regularly, throughout your life.
Tom: Ok, ladies! Mellody says you need to stay engaged! Anything else we need to know?
Mellody: Yes! I want to make sure that we highlight the advantages that women have here, because it isn’t all bad news. First, women are much more likely to ask for help, and that is a good thing! Ask a lot of questions! Secondly – and this is a big one in terms of investing – women tend to avoid trading in and out of investments. That bodes well for their long-term investment returns, and it is a strategy that we advocate at my company. One study found that men trade investments 45% more than women, and that behavior reduces men’s net return by 2.65% a year, compared with 1.72% for women. So make sure you are informed, and continue to ask questions, be patient and focus on the long-term. It will definitely help overcome some of the challenges that face women in retirement.
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This Week’s Celebrity Instagrams (11/26-12/2)
30 photos Launch gallery
1. Little Legend and Puddy 😍😍😍😍
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2. "You on point Phife?" "all the time,Tip". 💥 #bannedfromnormal
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3. Vegan! The Impossible burger at Crossroads
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4. Lawrence #BeforeandAfterEpisodes 1-4: 184lbs 13% body fatEpisode 8: 196lbs 8% body fat S/O @coachdaveboxing with the works outs and @kildareriordan with the nutrition
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5. Jus haaaanngin out
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6. Meanwhile back at home in Atlanta GA someone mad they not on the 🛳. 😳
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7. No limits... Photo cred: Chris Bridges @ludacris
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8. new new
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9. Apparently my 260lbs is too much for the actual vines in the Hawaiian jungles to hold me without breaking and me falling hundreds of feet. So for safety purposes, I'm forced to swing thru #Jumanjj on wires strong enough to hold 12 adult buffaloes and 1 adult Rock. #OnSet #Jumanji #IronicallyIEatBuffaloDailyForLunch #MoreManThanNatureKnowsWhatToDoWith
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10. hey ma! 🎎#wcw 💙
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11. Surprise visit to our factories!!! #GoodAmerican #USA
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13. Peachy Keen 🔥✨⚡️
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14. If this don't look thankful I don't know what does. Happy Thanksgiving to you and yours. #UltraBlessed #24kMagic #SweetPotatoFly
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15. Late nights @nbcmarlon with the writers... we in here!!!
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16. There goes my baaaaaaaaabbbbyyyyy #QueenKingMagic!!! We're up to something! Ira BIG!!! Stay out our buisness -
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17. You want to win every game you play but when you come home to these faces... who cares. #ILoveYouGirls best part of my day, everyday!
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18. Steady,steady..... full size jenga.. "I got this one "???? Or do I ?
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19. Cornrows kind of day 😉@dontaysavoy2 you convinced me and I love. ❤️️
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20. #BrotherlyLove #tbt
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22. #basel #TeamLOVE @kingcombs
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23. Just introduced a special screening of @directher 's groundbreaking (must see) documentary @13thfilm with my brother @themichaelealy | @unitedblackout #blackoutblackfriday
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24. Me & Vanessa Williams giving #DuckLips #Pose on the set of #DaytimeDivas @vh1 - Coming Soon to a tv near you. Lol. - My make up done by @makeupsurgeon
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25. This picture just makes me wanna praise the Lord, you hear me!!!!!! Yes Lord brotha #TEDDYCAMPBELL What a #man !!! You are everything right on this picture husband ......... #gorgeous #stylish #classy #strong #masculine #king #sexy #debonair #gentlemenstyle And that #bible in your hand just seals the deal for me (probably cause i know that, that is what helped you become just as amazing as you look😘). While my heart and mind experiences the goodness of God at #church on Sundays, my eyes experiences the goodness of Teddy😍. Amen somebody🙌🏽. "Bless the Lord oh my soul and all that is within me bless his holy name" #myman #myhusband #goodman #blackman #dapperman #godlyman #goodfather #mybestfriend
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26. Yesterday was my mama's 53rd birthday!!!!! Got to celebrate with her all day. If this is what I have to look forward to I can't wait. Looking like a soft bucket a cocoa butter. Yaaaaaaaaaas! 😍😍😍 love you mommy!
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27. "Shout out to @PureAtlanta for getting the family right"....I'm loving this jogger. 😍😍
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28. This pic warms my heart ❤️ #myLogiebeans and aunt aunt umba @itowandabraxton 😘
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29. You will always be my baby😜. #HappyBirthdayReginae #mybaby18
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30. GC "Gods Child" Red on Red SweatSuit available now at www.MonicaApparel.com ... Take Your Crown wherever you go!! I'm pictured in a Medium... Go to the site now for other options ... cc: @trukernell
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