Women Require Different Financial Plans
by Andrew Downing
Photo from: Advisor’s Edge ”Planning tips to engage women”
When planning your financial future, it’s important to consider the differences between the financial needs of men and women. You can listen to general advice, but knowing subtle differences can make a huge impact on your financial future.
Important Financial Considerations for Women:
Mindfully Save and Plan. Whether it’s for maternity leave or to provide family care, women are more likely to take time away from work. As a result, they need to approach savings and career planning with more awareness. Time away from work disrupts income and savings, such as 401K contributions, resulting in less of an opportunity to save for retirement and financial emergencies. This requires women to carefully plan their finances and consciously supplement their savings and income whenever they get a chance.
Women Live Longer. Living longer means women need to save more for retirement and plan for a longer payout, using a well-balanced investment portfolio that includes pensions, annuities, and income producing stocks, while also planning to start taking social security as late as possible. Additionally, women should establish a long-term care plan, as they are more likely to live alone during old-age. According to Caregiver.org, in 2005, 48% of women 75 years or older were living alone, compared to 22% of men.* When you combine those statistics with the cost of long-term care, you start to see why women must treat saving for the future differently than men. The average cost for a private room in a nursing home is almost $7,700 per month, and an assisted living facility averages about $3,600 per month.** These are major costs that cannot be ignored during the financial planning process.
Documentation Matters. Pay attention to documentation during the financial planning process. Many laws now make the transfer for wealth a lot easier for spouses, but you can never be too careful. Make sure that your name is on every investment account and insurance plan. Make sure that you have a financial plan in case your spouse passes away unexpectedly. Handling finances after a death is very stressful, so make the process as easy as possible through proper planning. You will regret it if you don’t familiarize yourself with the documentation and prepare for the process.
Educate Yourself About Financial Planning. Many women, including my wife, opt to take a backseat during the financial planning process. Whether it’s because they are overwhelmed by finances or because they trust their spouse to handle everything, you need to be included – and your spouse will welcome your involvement. Planning two financial futures alone is a lot of responsibility, so working together to ensure a bright financial future actually decreases stress.
* https://www.caregiver.org/resource/women-and-caregiving-facts-and-figures/
** https://acl.gov/ltc/costs-and-who-pays/costs-of-care