I was training with my Grief Coach Academy associates this past weekend in LA, and the recurring theme that coaches in both the US and Canada relayed were that their particular female clients were very unsure about their financial futures, and were seeking assurances and guidance regarding their investments.
I resonate fully with that in that one of the huge detriments of the advent of the Internet is the overwhelming and thus paralyzing amount of information on any topic—not the least of which is investing. While information CAN prove powerful, the more likely result of blind Google searches is confusion, wasted time attempting to vet the providers’ veracity, and inability to piece the information into one’s OWN intricate puzzle. And even if/when those investment puzzle pieces can indeed be put together into an arrangement that appears coherent, one then has to imagine whether there is an adverse income or estate tax implication to follow, and if so, is it sufficient to warrant an edit of the investment advice, or not.
Ultimately as investors, we need to walk the tightrope of not allowing the tax tail to wag the investment dog, all the while cognizant that investment and taxes are inextricably connected.
For years now, I have been asked to shed some light on investing for beginners, so believing that women and money are also inextricably connected, I thought, where better to start than by defining some terms. As such I wrote Ms. Morrison’s Dictionary of Useful Financial Investment Terms to equip investors with some basic knowledge:
I am committed to empower women about their finances, so that they can pack more options into their lives; using money simply as a powerful tool that indeed can purchase more options/opportunities. If you wish to receive information, please sign up for those topics/information that interests you, here on the pages of my website.
We Can Do It Women!™
As I heard the news of Margaret Thatcher’s passing this morning, I began reading so much of the history of this woman, and her courage to act in a way that she perceived brought renewal and hope to Britain. Of course I am not saying I agree with all she said or did (that’s a tall, if not impossible order for anyone, is it not?) yet I will forever be impressed with her stalwart leadership skills.
One of my favorite Margaret Thatcher quotes is “If you just set out to be liked, you would be prepared to compromise on anything at any time and you would achieve nothing.” May 3, 1989, commenting on her 10th anniversary as Prime Minister.
I think now of our quick and easy “liking” on Facebook for example, and smile as I realize how ultimately ‘shallow’ a ‘like’ is these days. I mean, it’s now an easy click of the mouse, or touch of our smart-phone, i-whatever screens.
Yet when we have confidence in our actions and in our direction about life matters; that requires FAR more than simply ‘liking’ our strategy, or being ‘liked’ by our friends/co-workers, etc., it requires devising a strategy and then applying a good amount of elbow grease and perseverance to see our goal through.
Confidence is one of the initial ingredients to decisive action. Information and wisdom run a close second to confidence. So, when I speak about Money Confidence for Women, I speak about what I believe to be essential skills for us to move forward; for women and money to be said in the same sentence without blanching, or shrinking.
I urge all women, the world wide, to do whatever it takes to bolster our confidence, and to take the next step towards ensuring that we have adequate income in retirement by saving NOW. Start small if you must, yet START. Your confidence will build as you take action. We Can Do It Women™
Big news recently – the gender gap has narrowed and the rate at which women and men participate in the employer-sponsored retirement plans is nearly equal. 91% of women and 92% of men said they participate in employer-sponsored plans so on the surface, things look like they are improving….but are they?
You know that I always urge you to check the fine print and this study is no different. While both men and women are participating in employer-sponsored retirement plans, only 12% of women versus 80% of the men report being on-target to replace 80% of their pre-retirement earnings. And only 79% of women versus 89% of men take advantage of their company’s matching-funds policy to max out their retirement savings.
That is not the only gender gap between women and men when it comes to investments. Nearly half the men said they felt confident that their investment allocation was correct. Only 29% of the women surveyed reported feeling confident about their asset allocation. Of course, that number could be explained by the fact that 89% of men say they have general investment knowledge. Only 65% of women say they have investment knowledge.
Overall, the study reports that women lag behind men in money management skills and investing – the very basics of financial fitness. Sadly, only 16% of women report that they have reviewed their combined assets to be sure that their investments are balanced across different classes. Part of the issue, it seems to me, is that women take a longer time to make financial decisions, which I think is due to the lack of confidence they feel about making money decisions. Add to that the all-too-common Bag Lady fears that women have and it is a recipe for poor financial planning.
There are three things that you can do to improve your financial fitness:
- Get my report on Overcoming Money Fears – you can request it at the top of this page
- Read my book Common Sense Money Guide for Women
- Book me as a speaker for your group’s next event
One result that surprised me was that women are actually ahead of men when it comes to meeting with a financial planner or attorney to make an estate plan. Sadly, it is only 4% of women and 3% of men who have taken this important step to securing their family’s future. It is my mission to empower women to break out of their white-knuckled, bag lady money fears and energize them to dream big in the second half of life. We do not have to be timid and afraid of money any longer. We can do it, women!
Earlier this year Prudential released a study on the “Class of 2012″ those people who are retiring in 2012. The results almost broke my heart. Not only do people miscalculate how much income in retirement they will receive, they also misjudge the amount of money they will need…and how long they will need it. At this time, if you are a women who reaches the age of 50 without a major illness, your life expectancy is 92 years. For men over 65, the expectancy is 17.6 more years and for women over 65, it is 20.2 more years. So the good news is that we are living longer than ever before. The bad news is that healthy life expectancy has not kept pace. For those over 65, healthy life expectancy is just 9.9 years for men and 11.5 years for women.
That’s why you need to check the fine print when they release these studies. Healthy life expectancy is part of your wealth. Health problems are just one of the reasons you may actually need more income in retirement than you thought. Of course, there are more pleasant reasons to need more income in retirement. You have time to travel now, and that costs money, especially since gas prices remain high. Or perhaps you want to relocate to a better climate. Relocation to a warmer locale almost always translates to a more expensive area. The cost of living is an important consideration when determining how much income in retirement you will need.
When making your retirement plans, you should also consider the role of inflation. Future costs of goods and services you use are likely to rise. That can eat away at your income in retirement, even if inflation remains low. The low rate of 2% inflation can eat way nearly one-third of your purchasing power over 25 years. That is a big impact on your income in retirement.
So when making your retirement plan, you should include these factors:
- Living longer
- Increased health care costs
- Inflation’s impact on your purchasing power
As a fee-only Certified Financial Planner, I can help you create a retirement plan that takes into account the things you value and the factors that make a solid, reliable plan for income in retirement.
The March 26, 2012 Time Magazine cover depicts a figure in a skirt aside the feature article entitled The Richer Sex; Women are overtaking men as America’s breadwinners. I found myself staring at the figure, not realizing immediately why it appeared so dissonant with me until it hit me; double barreled.
First of all, the head of the woman is pictured with a Susan B. Anthony dollar coin, whereas the article stated that even today a significant “wage gap persists: women working full time earn a median wage that is 81% of what men make.” So, while the women’s wages have indeed risen from 59% to 81% of what men make for the same exact job with the same exact qualifications, the question remains, how much juggling is really required for women breadwinners to indeed support their families in the lifestyle in which they are accustomed when they’re only earning a fraction of what men are earning for those very same jobs? I’m thinking a LOT!
The second incongruity was that the $1.00 dollar bills are folded into the shape of a woman wearing a skirt. How yesteryear is that? I mean women have fought long and hard to get to the 81% level of males’ wages, and for the most part, they didn’t do it in a skirt; they did it in construction, engineering, as well as teaching and executive management, yet they were not hindered by the confines of a skirt. Was that depiction of a skirt, to intentionally avert the comparison that more “women now wear the pants” in families? Hmmmm.
Regardless of the cover picture, the article brings to light a remarkable sea change, insomuch as the fact that we’ve not seen this kind of seismic shift—whereby if the trends continue by the next generation, more families will be supported by women than by men–since women entered the workforce en masse after World War II, led by none other than Rosie the Riveter.
The US Bureau of Labor’s 2009 study shows that nearly 4 in 10 working wives outearn their husbands; an increase of more than 50% from 20 years hence.¹
¹ Mundy, Liza. “The Richer Sex.” Time Magazine 26 March 2012:30.
The old “deal” of women being subordinate to their husbands providing domestic services and sexual fidelity is officially off. Simone de Beauvoir, the famous French philosopher stated that women were poorer in every sense for ever accepting that “deal”, yet:
1) I don’t think there was ever a choice since society pegged the salaries of women significantly lower and gender-restricted several lucrative industries, and
2) I think that society at large was poorer in forcing individuals into gender-restricted roles that in most cases, didn’t work well, or at all. One wonders how much of this contributed/contributes to the over 51% of first marriage divorces today?
Interesting to me, as a Certified Financial Planner who advocates that couples routinely discuss their money, and major spending decisions, a Pew Research Center study found that when men were the dominant breadwinner, the major decisions were made jointly. Conversely where the woman was the dominant breadwinner, she made twice as many major buying decisions.²
While buying decisions are said to include financial services, it has been my experience over the past 33 years, that women still lag woefully behind in making the investment decisions. And when they do invest, they do so without proper education or training about how to create and monitor a portfolio, but rather with a mantra and investment discipline that matches, of “I don’t want to lose ANY money”. This results in women, even higher earning (and major breadwinner) women still invest more heavily in Interest Only and Bond investments, rather than stock investments. Why does this make a difference you ask? Well, first of all, historically speaking, no other asset class other than stocks has kept pace with the ravages of inflation; no other asset class has produced a return that would not only survive one’s tax bracket bite, yet also outperform whatever the CPI (measurement of inflation) rate was that year in order to buy the goods and services in that and future years. So, why have women eschewed stocks? They have succumbed to their own fear-filled emotions in pulling out of
² Mundy, Liza. “The Richer Sex.” Time Magazine 26 March 2012:31.
the stock market when it ebbs–as the stock market inevitably does in the normal cycle of investing—and then staying on the sidelines for fear of losing more.
Women need to think differently about money, and about investing. And when that happens, women will at least have a fighting chance to build retirement nest eggs, all the while supporting themselves, and perhaps a family as well. Until then, women’s financial needs will largely go unmet, and they will inevitably face a much longer working life than would otherwise be necessary.
The article speaks about men having “no map for the wilderness” of suddenly forsaking everything they’ve been conditioned and socialized to believe about their role in their families and in the larger society. Well while that is a concern, it is certainly LESS of a concern than my concern for women, who will NEED to invest wisely, as they generally take multiple year respites from the work force to have and/or raise children, and whose very retirement plans will need to provide many more years, to match their extended longevity—that is, unless their health declines as has been the case with men dealing with breadwinner stress, which will ultimately shorten women’s lives as well.
Let’s hope we women can use the men’s experience as a warning, and seek medical check- ups on a routine basis, so that we can nip any medical ailment in the bud, and continue to pursue our dreams—whether that’s as a stay-at-home mom, a mom in a breadwinning career, or a single woman in either or both capacities—as I also learned that 41% of babies are born to single women.³
The statistics of the last year have increasingly drawn our awareness to the sea change of women’s roles, and responsibilities; one of which is to attend to their/our finances—even if it is to delegate the core responsibility to a fee-only (objective) financial planner, as if our lives depended upon it, because they do.
We Can Do It Women™!
³ Mundy, Liza. “The Richer Sex.” Time Magazine 26 March 2012:34.