5 Statistics Women Need to Know About Managing their Money — and 5 tips on how to take control
By Samantha Fraelich, Financial Representative, Bernard R. Wolfe & Associates, Inc.
Whether you're a women who is single, divorced, or widowed, it's more likely than ever that at some point in your life you will need to fend financially for yourself.
Take a look at these statistics (sources are listed below):
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- 47% of Women over 50 are single and have to support themselves.
- In the first year after a divorce, a woman's standard of living drops 73%.
- 80% of widows experience a significant drop in their standard of living compared to before their husband’s death.
- Studies have shown the average woman lives 5-6 years longer than a man-thus making their retirement funds even more crucial.
- Women retirees receive only half the average pension benefits that men receive.
The good news
Generally speaking, women are working today. Take a look at any elementary school drop-off site and you are likely to see just as many career women dropping off their kids, as stay-at-home moms.
Plus, given the recent economic downturn, female dominated industries such as education and health care haven't been hit with nearly as many lay-offs as have many male dominated industries such as construction, investment banking, and manufacturing.
With more women earning wages on a regular basis, they are typically now able to contribute to an employer-sponsored and/or a self-directed retirement plan and take control of their financial futures.
Here’s some pointers on how:
1. Identify your goals. Ask yourself what do you want to be able to do during retirement to feel comfortable? How much money do you think you’ll need to accomplish that goal? What is your current saving style? How long do you plan on working? Do the math to determine if your current habits reflect the amount of money you are saving. Write down your answers and refer to them regularly so you will be able to visualize and strive toward your goals.
2. Consider the possibility that you might have to support yourself someday. Regardless of how savvy today’s woman is, many still rely on their husband to make financial decisions for the family. If that is you, realize that you may have to take control of the finances at some point — so begin preparing for that day now.
- Know the name and phone numbers of all of your professional advisers — including your CPA, estate-planning attorney, mortgage lender, and financial advisor.
- Make sure you have investments in your name and not just your husband’s.
- Open your own retirement account if you haven’t already done so.
- Make sure you save some of your own salary if you have one. Often, women who are married or have children let their husbands make the larger retirement plan contrubtions, but often the women's salary is used for household or children's expenses, or gifts to the children and grandchildren.
- Have at least one credit card in only your name so you establish and maintain credit.
- Make sure you have assets and investments* in your name too so that whether it’s divorce, illness, or death, you won’t be in financial trouble.
3. Open your financial statements. There’s no doubt about it — 2008 was a rough financial year for almost everyone. Unfortunately, many of our clients admit they stopped opening their investment statements. Although it’s understandable, it simply isn’t smart. If your husband currently manages your finances, and you’ve noticed larger piles of unopened statements lately, take charge ladies and open them.
4. Be careful whom you listen to. Although financial advice seems to be available from a variety of TV commentators and other free sources, be careful whom you listen to. Simply beating the S&P 500 every year, or owning five-star rated Morningstar funds, won't help everyone achieve their specific financial goals. Generic advice most likely will yield generic results.
5. Know when to get professional help. Sure, it’s tempting to do everything yourself, but just as most families have accountants and lawyers; many are adding financial consultants to their list of trusted advisors. The reality is that when you have the help of a professional, you’ll more than likely have more clarity and confidence in the process. An advisor can give you some much needed perspective, which is important because it’s usually tough to be objective when it comes to managing our own money.
Here are some tips on how to find an advisor you can count on:
- Ask your friends for references.
- Gather all of your investment, retirement, and bank statements so they can get a good picture of your situation.
- Interview several financial advisors — until you find the person you feel comfortable with.
- Study all the information you receive so you can be an active partner in the decisions that are made about your investments.
- Embrace your power. This is your future. This is your money. Invest it wisely. Good luck!
Women, Work & Divorce, Richard Peterson. University of Chicago Press: 1989
Business Week 05/2009