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!