If I suddenly lost my job or was walloped by medical bills, probably the last place I’d go for money to keep me afloat would be my retirement savings.
To me, this cash is untouchable. It turns out I’m not the only woman who feels this way.
Men? Not so much.
Handling a Money Crisis
Nearly one-third of American men (31 percent) would consider dipping into their retirement funds to cope with tough times as a result of unforeseen life events.
But only 23 percent of women would, according to new HSBC study, The Future of Retirement: A New Reality.
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If I found myself in a real financial bind, I’d cut out the fluff in my spending tout de suite — vacations, meals out, that sort of thing. I might withdraw cash from my rainy-day fund. Maybe I’d tap a home equity line of credit on the place my husband and I have lived in for 21 years. In case all that didn’t do the trick, I’d start selling valuable possessions, such as artwork or jewelry and my car.
Different Views on Downsizing
I’d even be open to putting our place on the market and moving to somewhere smaller and less expensive (if my husband agreed). About a quarter of women would consider downsizing their homes to deal with a financial difficulty, the HSBC study said. Just 14 percent of men would, though.
A Costly Money Mistake for Men
Seems to me, based on this report, that men could learn a few things from women when it comes to handling a financial emergency.
Extracting money from your retirement plans before age 59½, which men are more prone to consider, can sock you with a hefty tax bill and a 10 percent penalty. Not to mention that this move will diminish your savings unless you can recoup the money in the future. And why is there such an aversion to selling your home in order to downsize, guys?
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“From my experience, women see money as something static, scarce and finite,” Eleanor Blayney, the Washington, D.C.–based CFP (Certified Financial Planners) Board Consumer Advocate, told me. “When it's gone, it's gone. Men see it rather as a renewable resource. When you run out of money, you go out and get more.”
Blayney mused that the difference is probably a legacy “from the times when men's work was to make money, and women's work was to stretch the money she was given.”
5 Money Moves Men Could Learn From Women
I asked Blayney and a few other financial planners what else they thought men could learn from women if times were tough. Here’s what they said:
1. Get serious about cutting back on discretionary spending Brian Schwartz, a vice president and financial adviser at HSBC Securities in the New York City area, said he’s found that women and men both reduce expenses in hard times. The big difference: “Most women clients truly cut back whereas men seem to be a bit more selective,” said Schwartz.
2. Check your ego Planners told me men tend to get caught up in the status symbols of money and don’t want anyone to know they’re in a rough patch.
Men typically don’t want to sell the house or give up the country club membership, said certified financial planner Lynn Ballou, managing partner at Ballou Plum Wealth Advisors, in Lafayette, Calif. “They want to maintain the aura that everything is fine.”
That’s why men are more eager to dip into their retirement funds. “Tapping a liquid retirement account is very private and easy to do. You don't even need to tell your wife,” Ballou said.
When I asked some of my male friends how they’d handle a financial setback, they echoed what I’d learned from the planners and the HSBC study. “If I want to tap my retirement accounts, that’s my prerogative,” said one. “It’s fast, and I know I’ll pay it back. Plus I don't have to ask anyone’s permission. It’s my money.”
3. Assume you’ll live longer One reason women shy away from raiding their retirement accounts may be their fear of outliving their money. “Women are more worried about the sustainability of retirement savings than men in general, knowing that they are more likely to live longer and have higher medical and care expenses as a result,” Blayney said.
But men are also living longer than in the past, so they need to view their retirement savings accordingly.
4. Prepare for the worst-case scenario Men tend to be more confident that everything will work out and about their ability to invest successfully, said Eileen O'Connor, a managing principal at McLean Asset Management Corporation in McLean, Virg. Conversely, women often assume things could go awry and plan for that possibility.
5. Ask for financial direction. We all know that guys are less likely than women to ask for help if they’re lost. The same often goes for when they’re in trouble financially.
Women, by contrast, are quick to look for advice to help them out of a jam. “When things go wrong, bam! — we reach out to our network and our community for help and support,” said Ballou. “We’re are on the phone, on e-mail, gathering our peeps, reaching out to everyone we know for advice and to think of solutions. We will listen to all the possibilities.”
O’Connor is a big proponent of evaluating all your options during a financial setback, regardless of your gender. These include adjusting how much you’ll spend in retirement, working longer and leaving less money to your heirs.
What Women Should Do
The HSBC study did find one thing women must learn to do so they’ll be better prepared for emergencies: Save more money when everything’s going well.
(MORE: Women Need to Get Serious About Emergency Savings)
“In my experience, women generally do not dramatically increase their discretionary spending during good times,” said Schwartz.