A homemaker who breaks the retirement planning mold

USA, September 3, 2015

"This may be better than Bella's," I say, giving my cousin Steven the ultimate compliment by comparing his pastry to our Hungarian aunt's, whose hand-rolled strudels were the heart of our refugee family.

Homemaker Steven from the US

Ask 61-year-old Steven what his secret recipe is and he'll tell you it's time. As the family homemaker for the last twenty years he's been able to perfect his culinary skills while his three kids were in school and his wife, Holly, was at the office.

Steven's pies may be unique but his other day-to-day chores are no different than most other homemakers: carpooling, cleaning, shopping, and the occasional stolen moments for his personal passion, cooking.

The only difference between him and the other 86% of stay-at-home spouses globally is his gender.

And his savings habits.

Unlike the 71% of homemakers, who according to Aegon's new Homemakers retirement research, are not habitual savers, Steven has been setting money aside since the late 1980's, at least ten years before he got married. And unlike the 52% who have no retirement backup plan he's diversified his portfolio, knowing from personal experience that no single source of income is ever guaranteed.

Steven's commendable saving habits reflect more than personal choices. They imply a changing demographic that will inevitably alter the way families begin to prepare for retirement.

She was an artist, modeling her own mother, who still left most of the financial planning to her husband

The number of dads staying at home with their children has nearly doubled in the past two decades. A 2014 study from the Pew Research Center finds that almost two million fathers in the USA alone are at home, up from 1.1 million in 1989. This burgeoning trend is a game changer in that financial literacy among men – even stay at home men – is still substantially greater than for working women, an attribute that will inevitably influence retirement readiness statistics – and behavior – among this new breed of homemaker.

According to recent research by Aegon, even though today's women are better educated and more likely to find paid employment, they still tend to feel less prepared for their retirement than men.

Why are women – even those that have relinquished the role of homemaker to their husbands – still afraid to tackle their personal and family finances, and how will the men that are now staying at home help to change that paradigm, I wondered?

Perhaps my cousin's story may lend some insight.

Financial planning skills

By the time Steven married Holly in 1994, he was already a seasoned financial planner, a role he had honed over many years in his father's business.

Our mothers were sisters. Miraculously, they survived the Holocaust and emigrated to America with our grandmother and a third sister. All but my mother, the rebel, married other Hungarian refugees they met in America. These were the kindest, warmest folk you could ever encounter. Steven's dad, Uncle Joe, would hug me so hard I could hear my neck crack. He would slobber my nose with kisses each time he saw me and call me Princess Hakapuss, a title reserved just for me, the youngest of all the cousins.

But like most refugees from the "old country," Joe was wholly unprepared for the dog-eat dog rigors of a highly competitive New York City, where he lived and worked as a garment salesman. By the time he started a wholesale woolen business in the mid 1980's, and recruited Steven to help him run the business, his basic savings account – the only bank product he knew – was not enough to remain competitive.

Steven was forced to become financially literate, reading furiously, talking to experts, friends, anyone he could find who knew more than he did, so he could develop a plan that would enable his parents to have a dignified life. He owed them that much.

I always heard an internal voice saying, You can't handle that stuff. Don't even bother

He invested a portion of his parent's savings in two of the hottest new products at the time, Mutual Funds and Roth IRAs (tax-free retirement accounts). So it seemed only natural that after he got married, he would do the same for his wife. He never told Holly he was putting the maximum allowable contribution in her IRA account each year, $2500, or if he did, she promptly forgot about it. Money matters weren't in her wheelhouse. She was an artist, and anyway, she was modeling her own mother, a brilliant therapist who still left most of the financial planning to her husband.

When the American garment industry died in the early 1990's, so did my cousin's family business. At age 40, with no other real employable skills and a baby on the way, Steve decided to reverse traditional roles, becoming the stay at home dad while Holly became the main money earner, working as a graphic designer for a medical marketing group.

Holly's company offered her a retirement matching program. She ignored the offer for years, too distracted to take note of its benefits, until Steven convinced her to sign up. "It wasn't that I didn't know about it. I just couldn't be bothered to think about it." She told me. "Finances were a man's thing."

She told me: "Finances were a man's thing"

Only after Holly's father died this year and she was forced to take over all of her mother's finances, did she start to get interested in financial management.

"As women, I think we put our heads in the sand" she told me while munching on Steven's newest creation, a coconut cream pie. "I know I did. I always heard an internal voice saying, You can't handle that stuff. Don't even bother. Was it vocalized by the men in my family? I don't think so. But it was implied. It was in the air, in the culture. And I believed that voice. To be honest, I feel a bit cheated by it. Because even though it's very stressful dealing with my mother's bills and investments, there's incredible satisfaction in it too. I feel empowered, because I know I can handle this thing I've avoided my whole life. I think I may even be good at it. Better at it than baking a pie, that's for sure."

Further information

The Aegon Center for Retirement and Longevity carries out the largest annual global retirement readiness survey of its kind. The facts quoted in this article are taken from its recent report - Homemakers Are Not Off the Hook: How Should They Be Planning for Retirement?

Written by: Lisa Lipkin