Data & Research March 19, 2015

Women Need Retirement Planning Nudge

Research from the LIMRA Secure Retirement Institute suggests women could use a nudge to complete certain retirement planning activities.
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LIMRA research consistently shows that the top financial concern for both women and men is saving enough money for retirement (83% of women compared to 77% of men).

But, taking action to prepare for retirement seems especially hard for women. Only 20% of women surveyed indicated they are comfortable with their level of financial knowledge. In addition, LIMRA finds that women are less likely than men to have done basic retirement planning activities.

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Nearly half (48%) of men have calculated the amount of assets and investments they will have available to spend in retirement, but only 40% of women have done so. Two-thirds (66%) of men have determined what their Social Security benefits would be at different retirement ages, compared to 63% of women.

Fifty-four percent of men have determined what their income will be in retirement, while 53% of women have done the same. Forty-eight percent of men have determined what their expenses will be in retirement, versus 47% of women.

The only retirement planning activities more women than men reported doing were determining health care coverage needed in retirement (44% of women vs. 39% of men) and estimating how many years assets and investments will last in retirement (35% vs. 34%).

LIMRA notes there are valid reasons why saving is tougher for women.  According to Bureau of Labor statistics from 2014, the median wage for women was 83% of men’s wages. Lower salary over a working career, combined with breaks in employment to care for children and other family members diminishes retirement savings and results in lower Social Security income.  The fact that women usually live longer than men only adds to the challenges of retirement planning for women, LIMRA says.

However, women recognize they need help. Six in 10 agree that professional advice is needed for retirement and evaluating current savings plans. Fifty-one percent of women also said their need for professional advice has increased over the last few years, compared to 45% of men. 

The data comes from LIMRA Secure Retirement Institute’s “U.S. Consumers” study, which surveyed 6,015 consumers ages 25 to 64.

Diversions March 19, 2015

Don’t Forget the Closing Costs

Which counties have the lowest and highest closing costs when buying a home?
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Surprisingly, the price of a home may not reflect the amount of its closing costs, according to a survey by SmartAsset.

According to AJ Smith, managing editor of SmartAsset, the national average of a home closing costs is 2.2%, based on a 30-year, fixed-rate mortgage. “It’s not exact, but it can be used as a yardstick,” she tells PLANADVISER. “A lot of the nation is right around that 2.2%, but then a few were quite a bit less.”  

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And some were quite a bit more, SmartAsset found. Buying a home is one of the biggest financial decisions people make, Smith says, and people don’t always consider closing costs when they try to calculate whether they can afford a home, or when they weigh renting versus buying. “Closing costs can sneak up on people,” she says, “and it’s usually not a small number. We wanted to show people what they can expect to pay, and also look at how counties differ.”

Hamilton, Indiana, takes top place for the lowest closing cost—at an average of $3,045. The median home value is $214,400, and the closing cost expressed as a percentage of the home’s value is 1.4%.

Quite a contrast is Kent, Delaware, with the highest closing cost: $9,634. Home value in Kent is $205,100, generating a closing cost of 4.7%.

Overall, Indiana took five places out of ten for lowest closing costs in counties nationwide, followed by Iowa, which has four. Perhaps unsurprisingly, six counties in New York have the highest closing costs—but only one is in New York City. Think it’s Manhattan? Guess again. Closing costs in the Bronx, where the median home value is $99,300, average $3,816. As Smith points out, the cost is somewhat unpredictable: “It’s good to keep it in mind as a number to think about,” she says.

All home prices in the lists are median home values, and the closing cost is expressed as a percentage of that valuation. The top ten highest closing costs in counties throughout the U.S. are:

  1. Kent, Delaware: $9,634 based on a median home value of $205,100 (4.7%)
  2. Sussex, Delaware: $11,278,based on $241,800 (4.66%)
  3. New Castle, Delaware: $11,699, based on $251,200 (4.65%)
  4. Washington, DC: $18,124 based on $443,000 (4.1%)
  5. Cattaraugus, New York: $3,059 based on $79,600 (3.84%)
  6. Steuben, New York: $3,274 based on $85,200 (3.84%)
  7. Chautauqua, New York: $3,154 based on $82,100 (3.84%)
  8. Wyoming, New York: $3.816 based on $99,300 (3.84%)
  9. Bronx, New York: $14,591 based on $380,900 (3.83%)
  10. Armstrong, New York: $3,513 based on $92,300 (3.8%)

Using home prices as median home values, with the closing cost expressed as a percentage of the home value, the top ten lowest closing costs in counties in the U.S. are:

  1. Hamilton, Indiana: $3,045 based on a median home value of $214,400 (1.4%)
  2. Johnson, Iowa: $2,632 based on $183,100 (1.4%)
  3. Dallas, Iowa: $2,627 based on $182,700 (1.4%)
  4. Boone, Indiana: $2,638 based on $182,300 (1.4%)
  5. Teton, Wyoming: $10,057 based on $692,700 (1.5%)
  6. Porter, Indiana: $2,442 based on $166,600 (1.5%)
  7. Dearborn, Indiana: $2,381 based on $161,700 (1.5%)
  8. Hendricks, Indiana: $2,378 based on $161,500 (1.5%)
  9. Story, Iowa: $2,370 based on $160,700 (1.5%)
  10. Madison, Iowa: $2,357 based on $159,600 (1.5%)

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