At Creekmur Wealth Advisors we have learned that everyone benefits from having a financial plan in place. Our financial planning and investing process is well established to help individuals and couples define and progress toward their own unique goals. This process is effective for men and women. However, there are some unique situations that make financial planning for women even more important.
Women continue to earn less.
Although advances have been made in recent years, the average woman who works full time earns $0.82 for every $1 earned by men.¹
Women live longer.
A man reaching age 65 today can expect to live, on average, until age 84, while a woman of the same age can expect to live until almost 87 years. As a result, women generally need to rely on retirement income for a longer span. As a result that can also face higher health care and long-term are costs than men during their retirement years.³
Women are more likely to be single later in life.
In 2020, 70% of men age 65 and older were married, compared to just 48% of women.4 This limits the opportunity to pool resources and share expenses with a partner during retirement. These are just a few of the reasons why it’s especially important for every woman to have a personal financial plan in place. For many women, financial independence is a large concern. Today we’re sharing some action steps that women can use to move toward financial confidence now and into the future.
1. Be engaged in the decision-making process.
Married women or those who share finances with someone else, need to be actively involved in financial discussions – with their spouse or partner and with their financial advisor. We often find that married couples have different goals for their future which makes it very important that both parties are involved in the financial planning process. When inevitable disagreements arise, healthy, open communication will help ensure that you have a plan in place that both of you feel good about.
2. Maintain access to your financial documents.
Be sure you know where and how to access financial documents and statements for bank accounts, insurance policies, and investment accounts. Maintain a current record of where accounts are held and who is the owner of each one. Be sure that the person responsible for handling your estate knows where to access this information.
3. Pay yourself first.
Fund your Individual Retirement Account (IRA), 401(k), or other retirement account to the maximum if you are financially able. This will reduce your taxable income and allow you to benefit from tax-deferred compounding. If you leave a job, you might consider rolling your employer-sponsored plan (401(k), 403(b), etc.) into an IRA.
4. Choose a financial advisor wisely.
It’s important to work with a financial advisor you trust. An experienced advisor can help you find the best solutions for your situation at each stage of life and to develop confidence that you are on track toward your goals.
5. Plan for the future.
Work with a qualified advisor to establish a strategy to pass on your wealth to the people and organizations that matter most to you – while also ensuring that you are able to enjoy the fruits of your labor throughout your lifetime. Although it can be a difficult process, it’s important to prepare legal documents stating how you would like your assets divided and who you would like to appoint to assist you if you are unable to make your own decisions. A qualified attorney can help you make these decisions and prepare the documents.
Financial independence begins by establishing your goals and then putting a plan in place that will help you move toward them.
Financial confidence grows one step at a time. If you’re not sure where to start, schedule a 15-minute strategy call with one of our advisors. We would be happy to answer any questions you might have and then work with you to build a financial plan designed just for you.
1. Payscale. March 15, 2022. “The State of the Gender Pay Gap 2022.”https://www.payscale.com/research-and insights/gender-pay-gap/. Accessed May 17, 2022.
2. Social Security Administration. “Important Things to Consider When Planning for Retirement: What is Your Life Expectancy?” https://www.ssa.gov/benefits/retirement/planner/otherthings.html Accessed May 17, 2022.
3. RegisteredNursing.org. Dec. 28, 2021. “Here’s How Much Your Healthcare Costs Will Rise as You Age.” https://www.registerednursing.org/articles/healthcare-costs-by-age/ Accessed May 17, 2022.
4. Administration for Community Living. May 2021. “2020 Profile of Older Americans.” Page 6. https://acl.gov/sites/default/files/Aging%20and%20 Disability%20in%20America/2020ProfileOlderAmericans.Final_.pdf. Accessed May 17, 2022.
5. Free Network. Dec. 20, 2021. “Global Gender Gap in Unpaid Care: Why Domestic Work Still Remains a Woman’s Burden.” https://freepolicybriefs.org/2021/12/20/gender-gap-unpaidcare/ Accessed May 17, 2022.
6. AAUW. “Deeper in Debt: Women & Student Loans 2021 Update.” https://www.aauw.org/app/uploads/2021/05/Deeper_In_Debt_2021.pdf Accessed May 17, 2022.