3 Ways Women Can Address Their Unique Financial ChallengesSubmitted by AssetGrade, LLC. on June 23rd, 2019
Submitted by Susan Powers on June 23, 2019
Challenges exist for everyone saving for retirement, but we can take steps to make them less daunting. By identifying the challenges specific to your situation, we can build them into your financial plan to avoid surprises. While many of the challenges are the same for women and men investors, the majority of women will face some of the following challenges:
- Pay Gap and Time Away From Work – While improving, it still persists. According a Pew Research Center analysis of median hourly earnings, women earned 85% of what men earned. 60% of caregivers are women, average age of 49 years old. Caring for children, grandkids, aging parents magnifies the pay gap.
- Higher Heath Care Costs - In addition to simply more years of incurring medical expenses, as women live longer they are more likely to incur costs for Long-Term Care (LTC). 70% of nursing home residents are women, with average costs now exceeding $100,000 per AARP.
- Savings Need to Last Longer – Longer life expectancies mean savings will need to provide income for more years. Your Social Security claiming strategy will significantly impact your total benefit if you live years longer. You can start claiming at age 62 but you won’t collect the full benefit unless you wait until full retirement age (age 66-67). Waiting until 70, increases your monthly income even further.
The good news is that women also have good financial habits that can address their financial challenges:
- Women are long-term planners – They start early and focus on specific goals. By starting early, women can compound their returns over a longer period of time. Compounding, earning interest on your interest, is key to building wealth.
- Women trade less frequently – The longer holding time has resulted in higher average returns. The higher return magnifies the compounding of returns further improving the ability to build wealth.
- Women are more likely to ask for help - You call other experts: attorneys, real estate agents and accountants. A financial advisor, one acting as a fiduciary, can help guide you to making more informed financial decisions.
It’s important to commit to your investment strategy. The women we work with want a personalized financial strategy, one that answers: do I have enough, will my money last, am I missing anything?
Personalizing your portfolio and developing a strategy to suit your situation is an important factor. Taking into account your personal goals, objectives, temperament and tax bracket will make sure we answer these questions.