Editor’s Note: Excited to bring you another Kimberly Talks: Money Matters column! Hold on to your seats because it’s Women’s History Month and she’s talking Money & Women – how financing planning for women differs from financial planning for men! WHM highlights the contributions of women to events in history and contemporary society (Wikipedia.org) … It’s celebrated here in the United States, in United Kingdom and in Australia. The “holiday” corresponds with International Women’s Day on March 8. It’s a good time to connect with great women and compliment them. I must say this: Kimberly, job well done on your many years of unselfish money education throughout Central Florida and beyond!
Kimberly Talks: Money Matters
Financial Planning for Women
As women, we face several challenges when it comes to financial planning.
First, women still earn approximately 25% less than our male counterparts. The issue with women earning less is that we tend to have smaller retirement plan balances, pensions, and receive less in Social Security benefits. So besides the obvious of trying to shorten the pay gap, there are several other actions we need to take. First, be diligent and prudent about saving and investing…HAVE A PLAN and Stick to IT. Second, make sure that you are properly allocated when you do invest. Make sure your risk tolerance matches your time horizon.
Second, being a mother and/or caregiver is in my opinion, one of the most important jobs, and they are jobs, that a woman can hold. However, spending an average of 12 years out of the workforce tends to result in a much smaller amount of lifetime earnings which translates to women making smaller contributions to their retirement plans and fewer taking advantage of employer matches. This again leads to smaller retirement plan balances, pensions, and less in Social Security benefits. The average retirement plan balance of women is about 60% of that of the average man.
Third, there are more and more stories every day of women who find themselves in a financial crisis because of death of a spouse. Widows can experience a drop by as much as 50% in their social security checks and any pension income when their spouse dies.
A question that has to be addressed is: how long will your retirement last because we live longer. Longevity risk is real and should be addressed in any financial plan.
Another factor that we typically overlook is that women typically have higher healthcare expenses because we live longer. So it is important that we start investing early and often! We need to monitor our plans to ensure that we are putting ourselves in a position to outpace the effect of inflation and taxes. Remember, it’s not our Grandmother’s economy.
Finally, as women we have to do a better job of becoming more financially literate and savvy. I often tell people if you just read the front page of the Wall Street Journal, you will know more than most Americans. But, don’t stop there. Engage a financial advisor. Ask questions. There are several good books out there to read and help gain more knowledge. Get involved!
So you might be saying, “Kimberly, is there any good news?”
YES, there is! Women now own 9.4 million businesses -30% of all businesses in the US. These businesses generate about $1.5 trillion dollars in revenue AND Women-owned firms now employ over 7.9 million workers. That equates to 1 in 7 jobs!
-Kimberly R. Stewart