Money Issues Across Your Life Cycle

Some women are co-breadwinners while others are the only source of income. Throughout a woman’s life, she will experience many money issues unique to women. A woman may experience the following situations: lower earnings, lack of retirement planning, divorce, and fewer years in the workplace because of child-rearing or caring for older parents. Many of these issues can work against a woman’s ability to accumulate money and attain stable financial status.

Lower Lifetime Earnings

As a population, women generally earn a lower income than their male counterparts. The Equal Pay Act that passed in the 1960s was supposed to narrow the earning gap between men and women, yet a gender pay gap still exists today. Women who work full-time year-round still are paid 77% of a man’s pay ($37,000 for a woman compared to $48,000 for a man in 2009) (U.S. Census Bureau 2012). Inequities start early and worsen over time. Research has shown a 5% difference one year after college graduation and a 12% difference after 10 years. The only identified explanation for the unexplained gaps was gender discrimination (Arnst 2007; Boushey, Aarons, and Smith 2010).

Breaks in Career

Women are more likely to have gaps in their work years because of child-rearing (Duke 2010). Some women may leave their jobs for extended periods of time to go on maternity leave. Other women make the choice to stay home for an extended time, reentering the job market years later. During child-rearing years, some women may leave careers behind and choose to work part-time or find a job with hours that match closely with children’s school schedules. As a result, upon retirement age, women’s income and Social Security benefits are often lower than those of their male counterparts.
Women need to pay attention to any employer retirement plan or matched contributions that may have been a job benefit. Find out about retirement or savings before you leave the job. If money is invested in a retirement plan, can it stay until you are ready to retire? What are the options?

Divorce

The divorce rate in the United States is estimated at 36%–50% (U.S. Census Bureau 2010). In general, divorce creates a financial disaster for families and may leave a woman to raise children using less money. Spending may likely need to change when a divorce occurs. It is important to review monthly expenditures and establish a budget. Since cash flow may drastically change and not be the same from week to week, continue to review income and expenses. Depending on the number of years a woman was married, she may be entitled to part of her husband’s retirement income. Be sure all financial issues are revealed and resolved during divorce proceedings.

Care of Elderly Parents

Another family obligation that may interfere with building wealth is caring for an elderly or ailing parent or other family member. Women tend to be the major caregivers for sick or older parents. Some women may take a career break or retire early to attend to the full-time care of a family member. Even if a woman continues to work, caring for the family member may become a financial burden.

Widowhood

As women age, the likelihood of living alone increases. According to the U.S. Census Bureau (2010), among those 65 and older, 44% of women were married, compared to 75% of men. Widowed women account for approximately 40% of women 65 and older, but only 13% of men 65 and older are widowed (U.S. Census Bureau 2010). The average age of widowhood is 55 years old (U.S. Census Bureau 2010). A spouse’s death is not only emotionally exhausting, but also will likely end with financial consequences.

Lack of Retirement Planning

As a whole, women tend to focus less on planning for their retirement over the course of their career, having saved less for retirement than men. Because women are often the caregivers for the family, taking steps to ensure their financial future may take a backseat when other events occur.
Women are reluctant to taking risk. When women do put money into a retirement fund, it is often a conservative investment that earns lower interest rates than their male counterparts. Try to research investments and identify your best options.

What You Can Do to Prepare Yourself

Women can improve their financial status and retirement income. Financial planning and learning about investing are the first steps on the road to financial independence. Time is on your side when you start early. Small amounts of money saved and invested over time add up to a secure financial life.

(U.S. Census Bureau 2010)