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Women & Retirement: A Must Read for Today’s Woman

Women & Retirement: A Must Read for Today’s Woman

| January 29, 2021

It’s been said by many that “A Man is Not a Financial Plan”. In fact, Bridget Macaskill, former CEO, Oppenheimer Funds stated “Women can’t afford to invest as well as men, they need to do it better”. Both of these statements are based on the fact that women face greater financial risks than men. Here’s proof:

  1. All marriages, regardless how successful, end in one or two ways – death or divorce. Yet in many households women are unaware of the couple’s financial details and are generally unprepared for either situation.
  2. 90% of women will have sole responsibility for their finances at some point in their lives.1
  3. The median age when a woman is widowed is 592. The loss of a spouse can mean a significant decrease in retirement income from social security or pensions.
  4. Many women put their careers on hold to raise families or care for aging parents. As they forgo income they lose the ability to grow retirement accounts.
  5. Women earn 1/3 less than men during their working life3, therefore, they contribute less to social security - on average women receive $859 per month in Social Security vs. men who receive $1137 per month.4

Given these troubling examples, I reviewed my client base to see if I noticed anything different.  My analysis confirmed a few traditional attitudes regarding women and investing:

  1. Women start saving later than men,
  2. Typically save less than men,
  3. Women tend to invest too little and too conservative.

Although approaches to investing often differ between women and men, there are real (and severe) consequences of women not taking more of a critical role in charting their financial future. Too many women wait until a life event happens before they take action to put together a strategy to address future needs.  With a little foresight and the right preparation, women can proactively become better prepared for life’s events. Taking charge is more than common sense, it’s one of life’s greatest necessities.

To begin taking charge of your financial future take a look at Ten Things Every Woman Needs to Know: A Guide for Financial Independence:

 - Maintain Your Spirituality

“Happy Moments, PraiseGOD

Difficult Moments, Seek GOD

Quiet Moments, Worship GOD

Painful Moments, Trust GOD

Every Moment, Thank GOD”

                                        Author Unknown

2 - Know Your Finances

A) Assets owned by you and spouse

-  bank accounts

-  insurance policies

-  retirement & investment accounts

-  home, land, autos

-  other assets (art, jewelry, etc)

B) Liabilities owed by you and spouse

-  credit cards

-   mortgage

-  auto loans

-  student loans

-  other debt

C) Income

-  Salary

-  Investment Income

-  Other (Rental income, Alimony, etc)

D) Household Expenses

-  Fixed (tithe, savings, rent/mortgage, insurance, auto payment, etc.)

-  Variable (food, transportation, entertainment, clothing, eating out, etc)

3 - Maintain Access To All Financial Documents

A) Keep record (and know where to find) all financial documents such as wills, investment and retirement account statements, insurance policies, bank accounts, creditor account statements, etc.

B) Know which accounts are joint or individual accounts; beneficiaries on retirement/IRA accounts; maintain account numbers, company’s phone number, and agent’s name (as applicable).

 
4 - Maintain Adequate Insurance Coverage  

(May need assistance from qualified professional to determine proper coverage amounts

A) Life insurance (term, whole-life, universal life)
B) Health insurance
C) Disability/ Long term care
D) Home/ Renters/ Auto

 

5 - Establish Clear and Concise Financial Goals

A) Priorities

-  Retirement (save for retirement no matter what - you can always borrow for a house, car education, but not retirement)           

-  Personal savings (seek to maintain 6 – 9 times monthly expenses for emergencies)

-  Financial independence

-  Leave legacy to children

-  Children’s education

B) Dreams

-  Vacations

-  New auto

-  Travel

 

6 - Establish Written Investment Plan

A) Seek professional assistance to help determine strategy for each financial goal

-  Quantify amount needed

-  Investments should coincide with preference for risks, time horizon, & current starting

   point

B) Seek professional assistance for portfolio management

-  Diversify investments among various asset classes to reduce risk

-  Determine amount to allocate toward each asset class

-  Analyze performance periodically; modify portfolio based on economic environment

-  Rebalance portfolio annually

 

7- Establish Estate Plan

A) Minimum requirements include:

- Will

- Durable Power of Attorney

- Medical Power of Attorney

- Health Insurance Portability Accountability Act Waiver Form (HIPAA)

-  Living Will

B) Other documents that may be required

- Trust (use to hold money for minors, protect assets from former spouses or creditors, direct spending for spendthrift family members)

- Guardianship/directives for minor or special needs children

C) Update estate plan every 5 years or upon major life event such as death, marriage, divorce, births, new found wealth

 

8 - Research and Understand Your Social Security Benefits

A) Widows are entitled to SS as early as age 60 (50, if disabled)
B) If divorced, spousal benefits are available if the marriage lasted at least 10 years and woman remains unmarried
C) Seek professional assistance in determining optimal time for starting SS benefits
D) Access ssa.gov/women for additional information specifically for

-  Working Women

-  Women who receive SS benefits

-  Brides

-  New Mothers

-  Wives

-  Divorced Women

-  Caregivers

-  Widows

9 – Use Credit Wisely

A) Women should maintain a credit card in their name (use for emergency purposes only)
B) If in debt, avoid credit repair companies, debt consolidation loans, and tapping into 401K; instead, contact National Foundation of Credit Counseling (1-800-388-2227 or www.nfcc.org )   

 10 – Consult Parents for Information on Their Financial Condition

  1. Location of financial records, eg, insurance, bank accounts, credit cards, etc
  2. Have they done any estate planning, eg, Power of Attorney (Durable & Medical), Living Will
  3. Do they have medical insurance other than Medicare
  4. What is the amount and source of their monthly income
  5. Estimate of monthly expenses

 





 Sources:

1. Women and Affluence 2010, Women and Co A Woman’s Guide to Financial Planning, 2009

2. U.S. Census Bureau 2007

3. Department of Labor, Women and Retirement Savings, October 2008

4. Social Security Is Important to Women, Social Security Online, October 2007 

5.