This One’s for the Ladies: Financial Planning for Women
By: Allie Schmidt, Financial Advisor, CFP®, CPA
Women…we’re different from men in a lot of ways, but should our investment and retirement plans be different? Now, for full disclosure—and those who know me won’t be surprised—I support equality, whether it be gender, ethnicity, or who you decide to spend your life with. But despite my personal beliefs, when it comes to financial planning, we are not all created equal. This is an ever-evolving conversation. More women than ever are successful professionals, business owners, entrepreneurs, etc.; however, women often face different obstacles than men in order to achieve financial security. So whether you are a woman or love a woman (spouse, sister, mom, daughter), here are a couple of things to keep in mind when considering a financial plan.
1. ISSUE: On average, women live longer than men but earn less money; therefore, there is a larger chance that women will outlive their money. Women, on average, live about 5 years longer than men and make about 23% less per year, according to studies done by the White House and the Social Security Administration.
CONSIDERATION: Delay receiving social security benefits until age 70 to ultimately receive the highest monthly benefit. Work a couple years longer to grow your nest egg just that much more before retiring.
2. ISSUE: According to the US Department of Labor, women tend to be more conservative investors, they take on less risk in their investments. This can make it a challenge to earn the consistent returns that are necessary to have money grow over time to meet their goals.
CONSIDERATION: Sooner than later seek advice and be involved in your plan. Learning basic investment concepts, time horizon, diversification, and investment vehicles can be empowering and make you feel more comfortable taking the appropriate risk for your assets and time horizon to ultimately meet your goals.
3. ISSUE: Women will likely outlive their spouses. Not only is this emotionally difficult, but can be difficult as you age and need help or care.
CONSIDERATION: Include this scenario in your financial plan. Think about how you’d like to handle this type of situation if it were to arise, whether a long term care insurance plan, an asset based plan, or relying on children or younger family members to help take care of aging parents.
So, the simple answer…yes. Yes, women should have slightly different financial plans than men, or at least consider a couple of different variables when planning.
When I was writing and researching this, a lot of things reminded me of my mom. She’s very intelligent and good at a lot of things, but understanding and being involved in the investments and financial planning is probably, admittedly even, not on the top of her mind. So, for people reading this who are like my mom or if you know someone like my mom, I just wanted to point out a couple things to make sure these wonderful caring women also take the steps to take care of themselves.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through HD Wealth Strategies, a registered investment advisor and separate entity from LPL Financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and asset allocation does not ensure a profit or protect against a loss. Stock investing involves risk including loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.
