Women Face Unique Financial Challenges

Women face unique opportunities and challenges with their finances. Many women are marrying later in life, getting divorced more frequently and outliving their spouses by an average of 7 years.

According to the National Center for Women and Retirement Research, these factors lead to almost 90% of all women will end up managing their finances alone at some point in their lives. Unfortunately, the first time that many women become truly involved with their financial matters is during a crisis, such as a spouse’s death or divorce.

A recent survey indicated 37% of women thought they would need to financially support an adult child and 38% thought they would need to financially support aging parents. More than 70% of Baby Boomers have at least one living parent. The “Sandwich Generation”, as they are called, care for their aging parents while supporting their own children, is often stretched to thin.

5 Areas to Understand:

• Your family’s finances – income and expenses; assets and liabilities.
• Your Retirement Plan – saving, pensions, 401(k)s, 403(b)s,
• Your Risk Management picture – health insurance, life insurance and long term care insurance.
• Your tax situation – proactive tax planning
• Your Estate Plan to protect your family and avoid estate taxes – updating your will, living will, power of attorney and trusts.

One of the most important goals for many women is retirement. Women often assume the caretaking responsibilities for children, aging parents and spouses, their long term earnings potential, retirement benefits and Social Security benefits may suffer. Make sure you are saving and investing enough to meet your short and long term goals.

Married women should learn more about their money, where it is invested and why it is invested. Risk diversification is widely recognized by finance academics and practitioners as the most important risk management technique.

Too many women rely upon their spouse, loved ones and friends to guide their financial matters. Some rely upon Financial Advisors who are not obligated by law to place clients’ interests before every other party.  While all of these sources of guidance may have the best intentions, none have the experience, licenses and legal obligations required for such an important matter.

Ideally, seek guidance from a Financial Advisor who is obligated by law to place clients’ interests before every other party, including the shareholders of their investment firm – this is called true fiduciary duty.

Another important goal for many women is having sufficient resources to meet health care costs in retirement.  A recent study showed that a 65-year-old couple retiring in 2010 will need $250,000 to pay for medical expenses throughout retirement, not including nursing-home care. That estimate is 56% higher than in 2002, when the calculated retiree health care costs were $160,000.

Although the average stay in a nursing facility is 2.5 years, it is longer for women. This translates to approximately $210,000, based on the average stay and the national daily rate for a private nursing home room. The average length of time for home care services is 3.6 years. 

Take Action

• Develop a clear actionable financial plan that helps you get from where you are today to where you want to be. You can’t predict the future, but you can Plan for it.
• Optimize tax advantaged investment vehicles and maximize tax deferred and tax free retirement accounts.
• Spend the time and resources needed to address your finances or seek guidance from a Financial Advisor who is obligated by law to place clients’ interests before every other party, including shareholders of their investment firm (Fiduciary Duty).

 After reading this article, if you'd like a FREE Financial Roadmap to find out if you're on track, click HERE.

Matthew J. Hudgins, Chartered Financial Analyst (CFA), Master of Business Administration (MBA) is CEO of Mosaic Wealth Management, LLC, a Registered Investment Advisory firm