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Women do everything – run households, pay bills, run businesses. But when it comes to saving and investing, advisors say more women could do to make sure they are better off in retirement.
March is the month of women’s history. As we celebrate the contributions of women in the past, many advisors, including Sylvia Kwan, Ellevest’s chief investment officer, want women to be more focused on contributing to their future.
“Women often feel like they have to wait until they earn a higher salary or accumulate enough cash to get started,” says Kwan. “But time and compound interest are powerful allies for building wealth and achieving a comfortable retirement. We want women to do it Get engaged early and invest early and consistently. “
Reclaim the past and present
Earn less, spend more
Women earn less over the course of their careers. You’ve probably heard that women make, on average, 82 cents for every dollar made by men. This pay gap is larger for many women of color. Earning less means accumulating fewer social security and retirement benefits as both are based on earnings history.
Women also spend more – women’s products are 7% more priced than similar men’s products – and women, on average, live longer so they can support themselves and deal with any health issues that arise over longer retirement.
Many women are caring for parents, children, or both, and that can lead to career disruptions that result in them earning even less.
More than 2.5 million American women have left the workforce since the COVID-19 pandemic began, according to the Department of Labor. The San Francisco Federal Reserve Bank recently reported that job losses affected more women than men, with the “cession” hurting mothers the most. In addition to the opportunity cost of non-compliance, there are additional costs involved in caring for others.
Rewrite the financial future
However, these complications don’t mean women can’t be well prepared for retirement. Margo Sweany, a wealth advisor at RMB Capital in Denver, says more women need to start learning about personal finance.
Make yourself comfortable talking about money
“I don’t like talking about money” and “Money can’t buy happiness” are common statements that Sweany says she hears from her customers.
“So much learning takes place in social settings and a lot of women miss out on valuable learning opportunities out of perceived appropriateness,” she says. “Money can’t buy happiness, but it can buy health, education and stability – things that most women care deeply about and that they should feel comfortable about when they talk about them openly.”
Be better informed
Improving your financial literacy is key to financial success, says Linda Erickson, founding partner and financial advisor at Erickson Advisors, an all-women firm of recognized investment advisors in Greensboro, North Carolina.
“The only way women can get more financially empowered is to be better informed,” she says.
According to Erickson, if you can’t afford professional advice, you can seek out local or online information and financial support groups. Community workshops are often offered by organizations like the YMCA, she says.
“A good place to start is with a financial wellness program that many employers offer their employees,” said Jamie Ohl, president, workplace solutions, Lincoln Financial Group.
Focus on you and your financial decisions
“Women will generally put off their own care and maintenance to take care of others first and will often leave themselves vulnerable to challenges like death or divorce,” says Erickson.
Just as important as prioritizing yourself is not passing your financial decisions on to your spouse or anyone else, counselors say.
A 2017 Merrill study found that 52% of women compared to 68% of men are confident about managing investments. Counselors say that lower confidence can cause women to postpone financial decisions on their partner, which can cause problems if you get divorced or your partner dies.
“Ninety percent of women will eventually be solely responsible for their finances,” said Philip Weiss, principal at Apprise Wealth Management in Phoenix, Maryland. “If your spouse dies, your income will likely go down. Take responsibility for your financial future and learn important financial skills. “
Make the most of your time
Women are sometimes more reluctant to invest, says Weiss.
“This can lead to higher cash balances and a greater likelihood of them retiring,” he says. Cash usually loses purchasing power over time because savings rates are not high enough to keep up with inflation. Investing can potentially help grow your money so you can outperform inflation.
Consultants therefore encourage women to invest early.
“One of the biggest setbacks for women is waiting too long to save and invest,” says Kwan of Ellevest, a robo-advisor who takes gender factors into account such as wage differentials, career breaks and longer lifetimes into its investment algorithms for women.
And you don’t need a bunch of money to invest, say consultants. There are no minimum investments on the Ellevest platform to get women started.
“We literally have women putting less than $ 5 a month into their investment accounts,” says Kwan.
Consider investing in women
Haleh Moddasser, managing partner at Stearns Financial in Chapel Hill, North Carolina, encourages women to use it Invest in ESG “To own your wealth” and “to empower yourself and others”.
“In this way, women can influence the social changes that are needed to level the playing field,” she says.
ESG investments are a type of sustainable investment where environmental, social and corporate governance factors are considered in addition to financial returns when evaluating an investment. Moddasser cites examples such as investing in companies run by women, companies that pay women on an equal footing with their male counterparts, and companies that offer childcare so women can stay on the workforce.
“ESG investments have been shown to produce comparable, if not better, returns with lower risk. In all honesty, it’s a breeze for women, ”she says.
Hire trusted help
“A financial advisor can help women take a holistic view of their finances from accumulation to protection to distribution and ensure that all considerations are considered and planned accordingly,” said Ohl of Lincoln Financial.
Married women, or those who have been married for 10 years or more, can reduce the retirement income shortage by considering various social security claim strategies, says Amy Braun-Bostich, founder and CEO of Braun-Bostich & Associates in Pittsburgh.
“You can also ensure that the higher-income spouse is insured to compensate for the death or disability of a spouse and / or the continuation of child support or child support,” she says.
Braun-Bostich highlights other potential strategies women can employ, including HSAs to pay for retirement medical expenses, guaranteed retirement income, longer work, deferment of social security benefits, maximizing retirement accounts, and obtaining long-term care.
Long-term care is essential for women, but an often forgotten aspect of retirement planning, says Molly Ward of Equitable Advisors in Houston.
“Women in the US are more likely to outlive their spouses and require more long-term care because of higher disability rates and chronic health problems,” she says.
A finance professional can help you set goals and find out what strategies will help you achieve your goals. Depending on the service level required, there are different advisors to choose from to help you meet your needs.
Bottom line: yes, there are hurdles, but women are resourceful. Just start making wise movements of money now, advisors say.
“Regardless of the circumstances, if a woman is thoughtful, thorough, and proactive, she can change the course of her life and that of her family,” says Ward.