As a financial consultant for many years, I’ve had the chance to meet many incredible women. From stay-at-home moms, to successful business owners, attorneys and professors, women face some unique financial challenges and risks. Despite their awesome accomplishments, however, many women still seem reluctant to take charge of their financial lives – “I don’t have any time,” “My spouse handles this,” “I have no interest” or “I have no clue where to start” – are some typical responses I receive to questions about investing.
This is especially disturbing when you look at the numbers:
• 90% of women will be solely responsible for their finances at some point in their lives1
• Women outlive men by an average of 5 years and must be financially prepared for a longer retirement
• Although the gap is closing, many women still earn less than men for comparable work
• According to the Social Security Administration, less than 50% of women have a retirement plan
• Nearly two-thirds of women ages 40 to 79 have experienced a major financial transition such as divorce or job loss (according to AARP)
With a longer life expectancy,2 women need more retirement income and will most likely have higher health care expenses. Making matters worse, because women generally spend less time in the workforce to raise children and typically earn less than their male counterparts, their savings rates will be lower. This will have a negative impact on the long-term value of retirement accounts, as well as on social security benefits.
So what can you do to be financially prepared for the future?
- First, ask yourself the following questions:
- Am I where I want to be financially? What obstacles are standing in the way of my financial goals?
- Have I set a realistic budget and am I saving as much and as early as possible to meet future financial and retirement goals?
- Am I comfortable with financial decision-making? If not, how can I better educate myself?
- Do I understand my risk tolerance and do I have an investment strategy?
- Have I thought about college funding for my children or grandchildren?
- Do I have adequate life insurance coverage to protect our family?
- With rising health care costs, am I adequately protected in case of an unexpected medical event?
- Am I working with a financial consultant I trust and does that individual always consider my best interests?
(If you answered “no” to even one of these questions, you are probably not as involved as you should be in your financial future.)
- Educate yourself and pay closer attention to major life events and their financial implications:
- Birth of a child or grandchild
- Aging parents
- “The unexpected” – divorce, job loss, health crisis, etc.
You can begin by checking out our library of educational resources. The videos and articles are short and a fun way to learn the basics.
- Distinguish between your needs, wants and wishes:
If you haven't already done so, try to prioritize your financial goals. To help understand the difference between needs, wants and wishes, take a look at the example below.3 Categorizing your goals gives you a framework that can help you plan for the type of lifestyle you want in the future. Starting to save early and saving regularly can help prevent the need to modify your goals later on.
- Create a plan for your financial future:
If you’re not comfortable going it alone, don’t worry. Many people seek assistance from a qualified financial professional to create a comprehensive, customized plan. Developing a plan is not as complicated as you may think.
Bottom line – Get more involved!! Educate yourself with the help of available resources, create a realistic budget, save as much and as early as you can, and start taking control of your financial future.
1 "Women in the Labor Force: A Databook," U.S. Bureau of Labor Statistics, 2012.
2 U.S.Census Bureau, Life Expectancy by Sex, Age, and Race: 2008
3 MoneyGuide Pro
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.