- 5-Minute Article
Helping Female Clients Prepare for All Stages of Life
Tips to help female clients financially prepare during each decade of their lives.
Women are a very important demographic within the insurance consumer base — something advisors are wise to keep in mind when prospecting for new business and working toward client retention. In fact, one recent report claims the women's market represents a trillion-dollar opportunity for the insurance industry.1
So how can you best serve the needs of female clients and appeal to female prospects?
Arming yourself with the right knowledge so that you may appropriately guide female clients at each decade of their lives is critical; as with any client, the goal is to ensure that they are in good financial shape and prepared for whatever the future holds.
To this end, here's a primer on what you and your female clients should be doing to ensure a healthy financial future in every decade of their lives:
- Recommend depositing a percentage of their salary (e.g., 5 percent) into a savings account each pay period.
- Establish an emergency fund: The goal should be to save three to six months' worth of pay.
- Clients should limit themselves to one credit card and ensure the balance is paid every month.
- Paying down existing debt is crucial during this decade; start with student loans and any credit card debt, focusing first on the debt that has the highest interest rate.
- Contribute at least the minimum percentage needed to qualify for the full employer match on the 401(k).
- If the employer doesn't offer a 401(k), proactively open an IRA. Be sure to set up automatic contributions into the plan.
- Purchasing life insurance and disability insurance is advisable, especially because clients in their 20's can lock in low rates.
- Continue to contribute to a 401(k) plan or IRA; the contribution goal should be 10 percent of their monthly paycheck.
- Make a 20 percent down payment when purchasing a home to avoid mortgage insurance. Clients should aim to spend no more than 28 percent of their monthly income on mortgage payments.
- Ensure your client has health coverage — if not through work, then through an individual plan. Review health coverage to ensure it meets their needs.
- If your client didn't buy life insurance in their 20s, and especially if they have started a family, now is the time to purchase it.
- Clients should make sure they have adequate auto and home insurance.
- If your client hasn't established a will, they should do so now.
- Review all their insurance policies (life, health, etc.) to ensure they still meet their needs.
- Clients should work with their advisor to set specific retirement savings goals (if they haven't already done this).
- Review the beneficiaries on their will, life insurance, and all financial accounts to ensure they are up to date.
- Consider options for long-term care insurance.
- Revisit retirement savings goals to make sure they still make sense; adjust as needed.
- Revisit with your clients how much they'll need in retirement to meet their goals; if there's a gap, make sure to address this.
- Discuss a deferred annuity as an option in your clients' retirement plans*.
- Re-evaluate your clients' 401(k) or IRA investment mix to help ensure their retirement savings goal is still on track.
- Review their total insurance protection and consider adding a long-term care policy if they don't already have one.
- Review your clients' retirement income strategy with them. Can your clients live off a percentage of their retirement assets while continuing to invest the majority or do they need to receive an income stream?
- Consider putting a portion of retirement funds into a deferred or immediate annuity based on their retirement income needs.
- Inform your clients about when they are eligible to receive the full Social Security benefit; remind them that if they can delay taking Social Security until age 70, their monthly payments will increase.
- Recommend that your clients look into Medigap policies to supplement Medicare coverage if they don't have retiree health benefits through their employer.
- If your client has a traditional IRA, remind them that they must start taking withdrawals after age 70 ½ in order to avoid a large tax penalty.
- Clients should ensure they have a proper legacy plan established.
- Clients who delayed their benefit should start collecting Social Security at age 70. Increase in benefit no longer applies when age 70 is reached.
If income during retirement is insufficient or if there isn't a financial safety net for unexpected expenses, advise your clients to consider their options and if an immediate annuity would be right for them.