When women begin to factor in the prospect of financially supporting themselves, they can feel like the deck is stacked against them.
When you envision your dream retirement, you’ll most likely fantasize about traveling the world, curling up with a good book, and swapping out your “pressing work issues” for pressed coffee instead. Although that all sounds nice, when women begin to factor in the prospect of financially supporting themselves, they can feel like the deck is stacked against them.
As women, we tend to heavily invest our resources in helping those we love. Unfortunately for us, that means that sometimes we forget to invest in ourselves. Financial expert, Chris Hogan, sums it up this way, “put the [mask] on yourself first.” This seemingly innocent airline derivative symbolizes and illustrates the importance of taking care of your needs first, so you can focus your efforts on helping someone else later. The “mask” may not always be about money, but can also be correlated to prioritizing your health, connection with others, and mindfulness.
Although looking out for others gives us the sentiment to know we’re supporting our loved ones, at what point are you going to shift your priorities so you can focus on yourself?
We have a few ideas on how to get started.
Be selfish in retirement.
Women are instinctually givers by nature– especially when it comes to finances. Ginita Wall, a tax accountant, financial advisor, and co-founder of the Women’s Institute for Financial Education, summarizes this concept best, by explaining that when it comes to financial habits and serving others, men tend to have a macro approach, while women focus more on the micro.
To put things into layman’s terms, men like to focus on the big picture in its entirety, while a woman’s micro approach focuses heavily on the small details that make up the big picture. Not one approach is better than the other, but it does help us conceptualize why women focus their efforts so heavily on giving to others… It’s in our nature to nurture. Unfortunately, there is some bad news. Making financial decisions based on emotion, can lead to the potential of irrational choices that can be detrimental to your retirement.
A study by Merrill Lynch found that 79% of parents are financially supporting their 18- to 34-year-old children in some way. In fact, Parents in the U.S. now spend $500 billion annually on their adult children, compared to the amount they contribute each year to their retirement accounts ($250 billion). The financial support goes beyond just groceries and phone bills, but even includes student loans, rent, and even mortgage payments.
Although being a financial blessing to your children may be important to you in the present, what about the future? Recent studies actually show that only 16% of women between the ages of 55-64 feel confident in their retirement plan. If you fall into the bucket of the remaining 84%, then now might be the time to revisit the financial boundaries you set in place with those you love.
Know your worth (& then add tax).
In almost every country in the world, women are consistently living longer than men. The Center for Disease Control reports that the average life expectancy for women teeters just at 81 years, compared to men who can expect to live to an average age of 75. This 6 year gap of lost income, especially if it’s from a breadwinning spouse, can cause a sense of vulnerability for anyone.
What makes things more difficult, is that the income challenges women face doesn’t just start with their spouse’s longevity… it actually starts with their salary. In 2020, women earned 84% of what men earned, according to a Pew Research Center study. In other words, it would take an extra 42 days of work for women to earn what men did in 2020. This is nothing new; even in the 1980’s women were earning only 67% of the wages of their male counterparts.
To add more salt in the wound, a lower average income at work means that you’ll have less to invest in the future. The average 401(k) balance for women in 2020 was $88,393, compared with $131,045 for men. Factor in other wage-driven variables like Social Security and pension calculations, and the difference in earnings can begin to compound even more.
That’s why it’s so important to not only grasp an understanding of your financial situation, but also your partners. Don’t misunderstand us, there’s nothing wrong with having your partner coordinate your finances if you’d rather spend your energy somewhere else; but, you at least need to have an idea of what your budget is, level of debt, and the number of assets you have, so you can look out for yourself in the future.
Prepare for unexpected health expenses.
Since women typically live longer, they can expect to pay $15,000 more than men for health care costs in retirement. This figure doesn’t include long-term care, which can range anywhere from $18,000 to over $100,000 depending on the services needed. The cost of care can add up, and with 70% of the nursing home population being women, it’s imperative to get serious about working with a professional to develop an income plan. And just to clarify– we’re not talking about a stack of papers that takes someone from NASA to understand. An income plan for retirement should tell you in simple terms: how much money you’ll be receiving, where you’ll be receiving it from, and how long you’ll be receiving it for.
Has your advisor done something like this for you?
It’s time to plan.
If you said “No,” you’re certainly not alone, in fact, you’re actually in great company, as 63% of women don’t even work with a professional advisor.If anything is evident, it’s that as women, we focus so heavily on nurturing those around us, that we forget to prioritize ourselves. It’s time to learn how to align your money with what matters to you the most.
Want to attend an exclusive, Women’s-Only Retirement Dinner based off of David Bach’s best-selling book Smart Women Finish Rich? You’ll learn the basics of retirement planning, mingle with women your age, and enjoy a fine dining experience… all complimentary to you! Click here to learn more. Dates are always being added.
Let’s take the mystique out of retirement planning!
Speak with a financial professional today.
At Fullerton Financial Planning, our goal is to help you reach your retirement dreams. Our certified fiduciaries and experienced investment advisors have decades of combined experience helping people find answers to difficult financial questions. Sit down with a Fullerton Financial Advisor today to discover if you are on the right track for your retirement goals.
We understand how important your financial future is to you and your family; we also understand how difficult making these plans can be. Investment vehicles are essential to any financial plan. When you schedule a call with Fullerton Financial Planning, we’ll help you decide which investment vehicles fit your specific plan and lifestyle.
Don’t leave your financial future to chance. Let us help you create a personalized financial plan so you can enjoy the retirement you’ve worked so long and hard for.
