Women and Financial Literacy: Facts You Should Know

Agemy Financial Strategies

March 23, 2022

As National Women’s History Month comes to a close, we take a look at why financial planning for women is more important today than ever. Whether you are a working woman, a retired woman, a stay-at-home mom or a mom with a son or daughter in college, you have to think about your retirement now. This is your money and your financial future. It’s time to take charge and start taking some steps that’ll help you move closer to your retirement dreams. 

Let’s give a shout-out to all the women out there first and foremost—because there’s no doubt that women have been making serious strides lately.

Managing money and financial planning can be a tough task if you don’t have the proper information at hand. Women especially bear the brunt of this while caring for a family and having a retirement plan in place. However, the barrier is closing between segregated duties, and more men and women are sharing financial tasks as a result of women becoming more confident about managing money, according to an annual survey on women and investing by OppenheimerFunds of New York.

Women Investors Breaking Financial Barriers

According to the Fidelity 2022 Money Moves Study, women currently ages 18-35 years old are starting to invest nearly a decade earlier than women ages 36 and older. On average, this younger generation of women started investing in a brokerage account at age 21, compared with age 30 for older women who started to invest during the same age frame.

Beyond opening a brokerage account by age 21, the study shows that younger women also opened a retirement account even earlier, at age 20, compared with their older peers who opened one at age 34. Not surprisingly, the pandemic has caused many people to reevaluate their finances and in the case for some younger women, this was the time to start investing with 50% reporting they have started to invest in the past six months, or they plan to do so in the next six months.

Those are some great reasons to celebrate. But there’s work to be done… A recent study found that only 12% of women are very confident they’ll be able to retire comfortably. Meanwhile, more than half of women (55%) expect to retire after age 65 or don’t plan on retiring at all.

Taking the initiative to educate yourself about complex financial decisions will help you achieve your financial goals. Here are a couple facts and tips on women and financial planning which can help you better prepare for the future.

Women can Struggle with Financial Literacy

Financial literacy is the most important and fundamental stepping stone to building and maintaining wealth. A lack of financial confidence keeps many women from pursuing education in personal finance. It’s because of this, that women are less likely than men to view themselves as financially savvy. As a result, women are less prone to negotiate salaries and attain financial independence.

Here’s The Facts:

  • Only 9% of women think they’re better investors than men are. However, women are less risk-averse and tend to seek financial advice, so their investments often perform better.
  • 23.3% of all Certified Financial Planners are women.
  • Only 18% of women between ages 60 and 75 passed a financial literacy quiz on retirement. 35% of men passed the same quiz.

Income Disparity & Gender Wage Gap

Women playing an active role in the workforce is a unique situation. An unfair wage gap and life interruptions have slowed career progress and have forced some women to struggle with basic living expenses.

On the brightside, the pay gap between men and women is narrowing. However, this development is progressing slowly. The pandemic caused income disparity across the board which had many women face financial challenges to their overall well-being and threatened their ability to gain financial independence.

Here’s The Facts:

  • The gender pay gap is higher among educated men and women. Women with a bachelor’s degree earn 74% of what men with a bachelor’s degree make.
  • The lifetime earnings of a woman with a bachelor’s degree is $1.32 million. The average lifetime earnings of a man with a high school diploma is $1.53 million.
  • Women ask for raises just as often as men do, but are only likely to get the raise 15% of the time, while men who ask get the raise 20% of the time.

Retirement Planning Priorities

Women tend to live longer than men. As a result, they must draw out their retirement savings for a longer period of time. Trends show women risk falling into poverty if they don’t have sufficient funds for retirement.

Single women of all types — unmarried, divorced and widowed— from age 44 to 64 are underprepared for retirement. One of the worst outcomes of not prioritizing savings is missing opportunities to leverage time in your favor. Money kept in interest-bearing accounts for years can grow into a substantial asset. Employer-offered accounts include tax advantages and sometimes match plans that double savings.

The wage-earning gap also limits available Social Security benefits — a built-in foundation that some seniors rely on for retirement expenses. As a result of these challenges, fewer resources and a lack of planning, women are more likely to encounter poverty in old age and be forced to rely on government programs for living expenses.

Here’s the Facts:

  • 84% of women who will retire after 65 plan to do so for financial reasons.
  • Nearly 50% of women have less than $25,000 in savings, compared to 36% of men.
  • 54% of women plan to work after they retire – including 12% who plan to work full time
    and 42% who plan to work part time.

Overcoming These Challenges

There are steps you can take as you get ready to start thinking about your retirement future. These include:

  • Start by assessing your financial picture: You’re going to have to be honest with yourself about where you stand when it comes to saving for retirement and how much you know about investments. Once you know where you stand, you can figure out how far you have to go.
  • Align your choices and values: Spend time considering what you want to value and prioritize in your life. Do you value time with family and friends? Traveling? A strong financial foundation — i.e., saving for emergencies and making retirement contributions?  If you realize that you are spending money on things you know you don’t value, it is time to reconsider your financial strategies.
  • Put Your Needs First: As a woman, we understand this is fighting against your natural instincts. Especially when it comes to financially helping your kids. But in doing so, women often put the goals and objectives of others before their own needs. Start focusing on yourself and your needs and redesign your relationship with money. Then move on to helping others.
  • Learn About Investing: When you know what your investing options are and how they work, you’ll feel empowered to make the kind of financial decisions the “future you” will thank you for. Check out informative news articles and financial podcasts as a fun way to stay up to date with the latest financial news and investment trends.
  • Get Help From a Professional: When you get the right information from the right people, you can make the right decisions.That’s why we always recommend working with a Fiduciary Financial Advisor who can guide you through your financial journey with your best intentions at heart. A Fiduciary you can trust can help you set short- and long-term goals and bring all the pieces of your financial life together.

Final Thoughts

Planning for retirement should look different for women and men given the different life cycles – and it’s never too late to start your journey to financial planning. You can improve your financial welfare by making a plan for how you will use your income wisely. The power to make positive and healthy spending and saving choices is yours. But a dream without a plan is simply a wish. You need to take the first step in taking control of your finances.

A great way to get started is by reaching out to a trusted Fiduciary Advisor. Your financial advisor should provide the education, time frame, and comfortable setting appropriate for your needs. And, if your advisor does not listen or pay attention to what you want for your financial future, find someone else to work with. At Agemy Financial Strategies, we have all of the tools you need to make the leap towards a healthy financial future. Our firm exists for the purpose of helping people achieve their personal and financial goals. Our philosophy is to deliver quality financial programs and teach principles for successful living. By working with us, you can envision your roadmap to success.

Click here to instantly book the day and time you’d like to connect with us for your complimentary 30 minute consultation. Our financial advisors in Guildford, CT and Denver, CO are looking forward to speaking with you.

Happy National Women’s History Month from the entire team at Agemy Financial Strategies!

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Digital Currency and the Future of Retirement Planning

Agemy Financial Strategies

March 16, 2022

Cryptocurrency is everywhere. From being used for charitable donations and even on our TV screens during the Superbowl commercials. But when it comes to the future of retirement planning, how do these new world assets come into play? 

With the popularity of cryptocurrency on the rise, everyone is eager to invest in it or invest it for retirement. Because crypto is so new, there are still rules and stipulations being crafted to be able to save it for retirement.

The IRS has rules in place stating you cannot contribute cryptocurrency directly into your Roth IRA, but there are currently no rules about adding crypto to your Roth IRA via purchase.

Here’s a look at digital currency and how planning for retirement could change.

Crypto & Roth IRA

Bitcoin IRA’s are retirement accounts designed to let you invest in cryptocurrencies. It’s important to be aware of the risk you are taking if you’re considering investing in crypto. Because crypto is so volatile, it would be considered unsuitable for somebody approaching retirement who cannot afford to ride out a downturn.

In 2014, the IRS considered Bitcoin and other cryptocurrencies in retirement accounts as property, so that coins are taxed in the same fashion as stocks and bonds. Thus, cryptocurrency held in a Roth IRA has an income tax basis for purposes of measuring gain or loss upon occurrence of a taxable sale or exchange.

Even though you can’t add cryptocurrency directly to your Roth IRA because of Section 408(a)(1). This section requires that contributions to IRAs need to be made in cash. You can however, add cryptocurrency to a Roth IRA by purchase, because cryptocurrency is considered a property.

Bitcoin IRAs

For those who are committed to include Bitcoin in their IRAs, self-directed IRAs (SDIRAs) allow for an alternative asset like cryptocurrencies. Recently, there have been companies designed to help investors include Bitcoin in their IRAs. Some of these companies include BitIRA, Equity Trust, and Bitcoin IRA.

One of the positives of adding crypto to your portfolio is that it can add further diversification to Roth IRAs, and others that cryptocurrencies which will continue to increase in popularity and price into the long-term future. However, one of the negatives is that crypto is characterized by being volatile, and this represents a huge risk for those investors approaching retirement who cannot wait out a downturn.

You should also be aware that fees for crypto IRAs are typically much higher than for “traditional” IRAs. There are also recurring custody and maintenance fees charged by providers of such services, and fees associated with individual cryptocurrency trades. A typical provider may charge 3.5% per transaction for each purchase and 1% or a flat fee for each sale. Cumulatively, those fees could negate the tax advantages offered by IRA accounts

Crypto & Charitable Donations

For charitably minded individuals, cryptocurrency investments held for more than a year could provide a unique opportunity to leverage highly appreciated assets to achieve maximum impact with charitable giving. Bitcoin and other cryptocurrencies can be donated to charity, just like stocks and other property. Donating cryptocurrency can, however, be a little more complicated.

Some benefits of using Crypto for charitable donations include avoiding Capital Gains taxes. Taxpayers can avoid having to pay capital gains taxes yet still claim the full donation as a charitable deduction if they donate the Bitcoin directly to the charity. If a taxpayer sells Bitcoin and donates the after-tax cash to a charity, the capital gains will be subject to short-term or long-term capital gains taxes, depending on how long they held the Bitcoin before selling it.

What’s more, if you itemize deductions on your tax return instead of taking the standard deduction, you may claim a fair market value charitable deduction for the tax year in which the gift is made and may choose to pass on that savings in the form of more giving. Donor-advised funds, which are 501(c)(3) public charities, can be a tax-efficient solution for accepting contributions of cryptocurrency, as the funds typically have the resources and expertise for evaluating, receiving, processing, and liquidating non-cash assets.

To substantiate your charitable income tax deduction, you are required to complete Form 8283 and obtain a qualified appraisal from a qualified appraiser for contributions of cryptocurrency valued at more than $5,000.

Final Thoughts

Investing in crypto is a tricky topic to say the least. Since there’s no one size fits all plan for everyone, it’s important to look at the risk and see if it’s something you believe you can take on. While holding crypto in your IRA can increase diversification, the extreme volatility of crypto makes it a poor choice for a retirement investment.

The good thing is that there are alternatives: crypto IRAs, which allow you to invest in crypto for your retirement accounts. Whatever your retirement strategy, there are risks to identify and manage as you navigate retired life. But one key factor remains the same: the more you prepare, the less nasty surprises you’ll face along the way. Plus using crypto for charitable donations could save you on Capital Gainss taxes and also may increase the amount available for charity by up to 20%.

At Agemy Financial Strategies, our first priority is helping you take care of yourself and your family. We want to learn more about your personal situation, identify your dreams and goals, and provide you with the highest level of service.

Click here to instantly book the day and time you’d like to connect with us for your complimentary 30 minute consultation. Our financial advisors in Guildford, CT and Denver, CO are looking forward to speaking with you.

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What does Socially Responsible Investing (SRI) Mean?

Agemy Financial Strategies

March 16, 2022

The last few years have been ones of stress and uncertainty – but it’s also been a time that’s brought to light issues of social justice, climate change and social responsibility. Here, we look into how more and more investors are opting to align their portfolio with their greater social beliefs and ideals. 

Socially responsible investing (SRI), is an investment that is considered socially responsible due to the business company conduct code. Socially responsible investments can be made into individual companies with good social value, or through a socially conscious mutual fund or exchange-traded fund (ETF). And it’s not going away anytime soon. In fact, between 2016 and 2018 alone, assets being placed in socially responsible investments rose 38 percent. Of the $46.6 trillion of assets under management, one in four dollars was in SRI assets.

Becoming a socially responsible investor isn’t difficult — and can be even more lucrative than traditional investing. Here’s a look at SRI and what you should know.

Examples of Socially Responsible Investing

The abbreviation “SRI” has also come to stand for sustainable, responsible and impact investing. Some SRI practices use a framework of environmental, social and governance factors to guide their investing.

There are two inherent goals of socially responsible investing: social impact and financial gain. The two do not necessarily have to go hand in hand. When an investment is risking gambling itself as being socially responsible, it doesn’t mean that it will provide investors with a good return. An investor must still assess the financial outlook of the investment while trying to gauge its social value.

One example of socially responsible investing is community investing. Community investing goes directly toward organizations that have a track record of social responsibility through helping the community, as well as being unable to garner funds from banks and financial institutions.

The funds allow these organizations to provide services to their communities, such as affordable housing and loans. The end goal is to improve the quality of the community by reducing its dependency on government assistance such as welfare, which in turn has a positive impact on the community’s economy.

Understanding Socially Responsible Investing

Investors interested in SRI don’t select investments by the typical performance metrics or expenses, they make investments on whether a company’s revenue sources and business practices align with their values. Everyone has different values, how investors define SRI will vary from person to person. There’s no one size fits all in this scenario.

If you’re passionate about the environment, your portfolio will likely have investments in green energy sources such as wind and solar companies. If you care about supporting women, people of color and other marginalized groups, you may have some mutual funds that invest in women-run companies or hold stock in Black-owned businesses. Socially responsible investing is as much about the investments you don’t choose as the ones you do.

SRI vs ESG vs Impact Investments

In the realm of SRI, you’ve likely heard other terms like ESG and impact investments. So, what’s the difference? Here’s a quick breakdown:

  • Socially responsible investing (SRI) entails screening investments to exclude businesses that conflict with the investor’s values. SRI excludes companies from an investment that are involved in certain businesses, e.g. gambling, alcohol, or fossil fuel. It’s useful for single-issue investors.
  • Environmental, social and corporate governance (ESG) investing focuses on companies making an active effort to either limit their negative societal impact or deliver benefits to society (or both). ESG rates companies on environmental, social and governance criteria to find the “good” ones. There are, however, no standardized criteria, so it depends a lot on who’s deciding what counts as “good”.
  • Impact investing is characterized by a direct connection between values-based priorities and the use of investors’ capital. Impact investing looks at the specific measurable impact of a company on a particular issue, e.g. climate change, gender lens investing, etc. Investors can see the measurable impact of their money alongside the financial returns.

How to Build a Socially Responsible Investment Portfolio

Creating an ethical portfolio doesn’t have to be difficult or intimidating. As long as you know the values that are important to you, you can start using your investment dollars for good. Here’s a couple tips on how to build an SRI portfolio:

Outline What’s Important to You

It may be helpful to specifically write down what you’re looking for in an SRI or ESG investment. Would you be comfortable owning stock in a company that scores lower in the environmental category if it had a majority-female board of directors? Knowing what industries you are and aren’t OK with supporting will make it easier to include or exclude certain investments.

How Much Help Do You Want?

There are a couple of avenues you can choose when it comes to creating an ethical portfolio. You can build it yourself, picking and choosing specific investments and monitoring them over time, or you can get some help. If you want maximum assurance that the companies you’re investing in support your personal definition of SRI, you may want to create your own SRI portfolio.

A majority of people prefer to make socially responsible investments when possible — but it takes some work to figure out how committed a company really is to ethical practices. This is where robo-advisors come in. Robo-advisors use algorithms to build and maintain an investment portfolio based on your risk tolerance and goals.

The upside of robo-advisors is they’re inexpensive, and several offer SRI portfolios that will do all the work of finding ethical investments for you. The downside is that they don’t let you add in specific investments you’re interested in.

Research with Care

An easy way to judge how socially responsible a company is is to review ratings from independent research firms. Two types of investments you may consider for a sustainable portfolio are stocks and funds.

  • Individual stocks generally shouldn’t encompass more than 5% to 10% of your portfolio, but if there is a company you expect will show strong growth, you may want to include it.
  • Mutual funds are an easy way to instantly diversify your portfolio, and there are more sustainable funds to choose from than ever before. Mutual funds include selected assets that adhere to criteria laid out by the fund manager. If your broker has a screening tool, it can likely help you sift through different fund options to find the right ones for you.

Final Thoughts

For many investors, socially responsible investing is a powerful way to align their investment portfolios with their personal philosophies.

When you’re getting started with investing, it’s important to research the options available to you. Now you know that Socially Responsible Investing (SRI) involves investing in companies that promote ethical and socially conscious themes including environmental sustainability, social justice, and corporate ethics, and fight against gender and sexual discrimination – how will you use this information?

If you’re interested in getting involved with SRI and looking to add it to your portfolio, Agemy Financial Strategies can be of assistance to you.

Our team of Fiduciary financial advisors only have your best interests at heart and are here to help you understand the ins and outs of investing for retirement income.

For more information on our financial advisory services, contact us here today.

 

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Financial Advice During a Crisis

Agemy Financial Strategies

March 02, 2022

Covid-19 has highlighted the importance of developing long-term business, financial and legal strategies that can provide a plan of action for even the most unprecedented times. What’s more, the Russia-Ukraine conflict has only escalated the effects on stocks in the U.S and throughout the world. Here’s how to best navigate and safeguard your money and retirement outlook amid a financial crisis. 

As we enter month three of 2022, many of us are still adapting to the constant COVID-19 changes. The recent Omicron Variant sent stocks plunging to their worst Black Friday since 1931. With all of these changes constantly happening, how can we covid proof our financial security?

Here’s a look at some financial advice to follow during a health crisis like COVID-19.

Covid Effects on The Economy

Thanks to the effects that COVID-19 is having on the U.S. economy, there’s an incentive to move money into a lower tax environment. Before the pandemic, there was already great concern about the federal debt, which was $22.8 trillion at the end of 2019. With the help of coronavirus relief spending and stimulus programs, the national debt now tops $26.5 trillion and is expected to grow.

The U.S. federal government was already facing the need to deal with the increase in budget deficits and the national debt that occurred as a result of the battle against COVID-19.

COVID-19 has added more of an incentive to contributing to retirement IRAs such as a Roth IRA. Consider the stimulus spending that happened last year, tax rates were low and were not likely to last. If you want to be in charge of how much money you’ll have in retirement, a good move is to get as much money as possible into tax-free accounts now.

The Russia-Ukraine War

As we all know COVID is no longer the main threat to the financial market with the war with Russia and Ukraine. The current, limited conflict has already increased turmoil in world financial markets and given support to agents and advisors who have encouraged clients to use non-variable annuities, universal life insurance, direct investments in bonds and other products designed to buffer the holder against volatility. In the medium term, the conflict could lead to enormous retirement planning complications for Russian citizen clients who live in the United States, U.S. citizen clients who live in Russia, Ukraine or other affected jurisdictions, and any U.S. citizen clients, anywhere in the world, who are married to spouses from Russia or other affected jurisdictions who are not U.S. citizens.

Sanctions imposed on Russian banks mean that clients may have trouble with everything from paying routine bills to getting the information needed to file tax returns. Americans who had planned to rely mainly on accounts in Russia to pay to retire there may suddenly have to look at what resources might be available to help them for retirement elsewhere.

Fresh Volatility to the Stock Market

The overall market has recently been reactive to inflation at a 40-year high, rising interest rates, the ongoing pandemic, and now, the devastating situation in Ukraine. This has only highlighted the fact that investors shouldn’t panic sell amid a crisis. If you did sell your investments off last week for instance, you would have lost to the market today.

We can’t predict if the market is going to crash because it’s already based on all publicly available knowledge. So while it’s human nature to act on emotion and the news we watch on TV, remember, the markets have more than doubled since the beginning of the COVID-19 pandemic when we saw the market drop over 30% in March 2020.

Generally speaking, stay the course, stick to your plan, continue to buy and always speak with your Fiduciary Financial Advisor before making such decisions.

Future-Proof Your Retirement

Don’t let the volatile stock market from COVID and war rattle your retirement savings plan.

Volatility is uncomfortable, especially as a retiree. For small investors, whose biggest exposure to the stock market is usually their retirement account holdings — 401(k), 403(b), 457 plans, the federal government’s Thrift Savings Plan, and Individual Retirement Accounts (IRAs). No one wants to go through watching their account balances fluctuate. However, it is part of the saving and investing process. Think of your assets separately. Money for now, money for a specific future need, and money for later, ten years or more.

 

Secondly, adjusting your current plan and asset allocation is a great duscussion to have with your Fiduciary advisor. By looking at how your overall retirement funds are invested, we can make necessary changes to keep your plan on track. Keeping a specific amount in cash to help ride out market fluctuations is extremely important, so always make sure your emergency fund is topped up.

It’s important to understand that some strategies can be more complicated than others. Sometimes certain strategies are better suited to certain individuals or families, so it pays to think this through. Remember, that with all strategies there is no one size fits all. Regardless of the direction you’d like to consider, it’s a good idea to talk with your trusted financial advisor who can analyze the pros and cons of all the options with you.

See How We Can Help

With the Russia-Ukraine conflict and the seemingly never-ending pandemic, investors are understandably nervous, and stocks are volatile. If you’re feeling stressed during these challenging times, and you’re looking for something you can control, this is it. At Agemy Financial Strategies, our first priority is helping you take care of yourself and your family. We want to learn more about your personal situation, identify your dreams and goals, and provide you with the highest level of service.

Working with the advisors at Agemy Financial Strategies can help you get ready for sinking markets—and stay grounded when they show up. We can explain ways to rebalance and help protect your accounts moving forward and even suggest a few investments we might consider making while the markets ware down. Creating a retirement checklist with us is a great way to pinpoint your main goals, compare them to retirement realities and make a plan of how to connect the two.

Click here to instantly book the day and time you’d like to connect with us for your complimentary 30 minute consultation. Our financial advisors in Guildford, CT and Denver, CO are looking forward to speaking with you.

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