Hi, I’m Rachel Rabinovich, a certified financial planner professional at Society of Grownups. Today, I’d like to discuss women and finances. As a female financial advisor, I understand the unique challenges many of us face as women. Let’s discuss a few of these challenges, as well as ways to stay on track financially.
Women Take Time Out
One issue many women face is the need to leave the workforce for a period of time. Often this is to raise children, but it can also be to take care of sick or elderly relatives. The most pressing concern about taking time off is the loss of immediate income. But it also makes it hard to save for the future since you’re not able to save into your employer’s retirement plan.
There’s also an impact on your Social Security savings. Since your benefits are calculated based on the number of years in the workforce and the wages you received, your retirement benefits could be lower.
Taking time off is a personal choice, and may be necessary, but you want to go in with eyes wide open and be able to plan for it.
Women still earn less
According to the Department of Labor, women still earn, on average, about 78 cents on the dollar compared to men . Lower earnings impact your budget, your ability to save for your goals, and your Social Security earnings. I agree it’s not fair and presents challenges for us, but there are ways to plan.
Women tend to live longer
My grandmother lived to the age of 95 and my great-grandmother lived to 103. Both lived decades beyond their husbands. So if your family is anything like mine, the women generally outlive the men. According to the CDC, women, on average, live about five years longer than men . What this means is that, as a woman, you may be living for many years into retirement and will need to provide an income for yourself.
So with all these challenges, how can you build a strong financial foundation for you and your family?
Be a Force!
I think the most important action you can take is to become an active participant in every aspect of your financial life. Create and maintain a budget, and take time to read statements. If you have a partner or spouse, be sure to share all financial responsibilities with that person - be a team so you'll always be in the know.
Build your own credit history
Know your own credit score and the factors that affect it. Even if you are married, your credit information is your own and affects your ability to get a loan and possibly a job.
Saving for Retirement
Living longer means we need income for a longer period. If your employer offers a retirement plan, be sure to participate and contribute at least enough to get any match available to you. If your employer doesn’t offer a plan, consider a traditional IRA or a Roth IRA. There are other options if you’re self employed or don’t work outside the home. Check out irs.gov for more information on all of these options.
If you have a family, debts, or own your own business, consider buying life insurance to protect those you care about in case something happens to you. If you are employed, consider disability insurance which protects your income in case you can’t work due to an injury or illness.
As women live longer into retirement, we’re more likely to need long-term care. Long-term care insurance can help cover the cost of professional assistance for daily living activities, which can otherwise deplete your savings.
If you have children under 18, a will is essential for ensuring they will be cared for by the person of your choice. A trust can give you control over how your money is distributed. Having medical and financial powers of attorney allow you to designate who can make decisions on your behalf if you’re unable to. Also, make sure all your beneficiary designations are up to date.
Know where everything is. This includes estate planning documents, a list of all assets and debts, and passwords to access all accounts.
Finally, don’t be afraid to ask questions of your financial advisor or tax specialist. You have every right to understand how your money is being managed.
While there are challenges facing women when it comes to finances, there are also many opportunities to be in control of your financial future. Thank you so much for watching today!