Are You Prepared For Change?

You love enjoying your financial security; you’ve established your career, you earn a nice income, and you’ve already paid for a home and college tuition’s. However, drastic changes like disability, illness, job loss, divorce, or aging parents can blindside you and your finances. You need to prepare yourself for unexpected changes to protect the financial security you already worked hard for.

Facing Disability, Illness, or Job Loss:

The greatest costs you retain when you become disabled or ill are medical provider charges. These charges include hospital, doctor, and medication bills. It pays to have health insurance especially if you can obtain reduced rates through your employer’s group plan. You may consider disability insurance if it pertains to you. Researching and picking the right insurance for you will provide the coverage that will protect you from paying high medical bills out of pocket.

Losing a job is always a drastic and immediate change. You need to develop some risk management like setting up an emergency fund that will cover all expenses while you are between jobs. Also, think POSITIVE. A job loss can lead to a new career, or a better position in your field of expertise. You may also decide to take some time off to travel, spend time with your family, or try out a new hobby during this time.

(Morris, A Woman’s Guide to Personal Finance)

Mature Woman Executive

Are Women Too Focused on the Short-Term?

Women, Money and The Long-Term

How many short-term financial decisions do you make each week? You probably make more than a few, and they may feel routine. Yet in managing these day-to-day issues, you may be drawn away from making the long-term money decisions that could prove vital to your financial well-being.

How many long-term financial decisions have you made for yourself? How steadily have you saved and planned for retirement? Have you looked into ideas that may help to lower your taxes or preserve more of the money you have accumulated?

In a 2014 Prudential survey of 1,250 American women, 86% of those polled felt that they lacked knowledge when it came to choosing investment or insurance products, yet 95% of the respondents identified themselves as the financial decision-makers in their households.1 Does this describe you? Perhaps it’s time to work toward gaining more confidence and control over your financial picture.

Start by taking inventory. Look at your investments and savings accounts: their balances, their purposes. Then, look at income sources: yours, and those of your spouse or family if applicable. Consider your probable or possible income sources after you retire: Social Security and others.

This is a way to start seeing where you are financially in terms of your progress toward a financially stable retirement and your retirement income. It may also illuminate potential new directions for you:

  • The need to save or invest more (especially since parenting or caregiving may interrupt your career and affect your earnings)
  • The need for greater income (negotiate for a raise!) or additional income sources down the road
  • Risks to income and savings (and the need to plan greater degrees of insulation from them)

Devoting even just an hour of attention to these matters may give you a clear look at your financial potential for tomorrow. Proceed from this step to the next: follow with another hour devoted to a chat with an experienced financial professional.

1 – http://corporate.prudential.com/media/managed/wm/WM-womens-research-summary.html

A young woman executive in a financial meeting

Women, Don’t Retire Without…

A practical financial checklist for the future.

 

When our parents retired, living to 75 amounted to a nice long life and Social Security was often supplemented by a pension. How different things are today!

 

The good news is that life expectancy for women – as measured by the Centers for Disease Control – is now 81.1 years. The Social Security Administration estimates that the average 65- year-old woman today will live to age 86. 1,2

 

Given these projections, it appears that a retirement of 20 years or longer might be in your future.

 

Are you prepared for a 20-year retirement? How about a 30- or 40-year retirement? Don’t laugh, it could happen: the SSA projects that about 25% of today’s 65-year- olds will live past 90, with approximately 10% living to be older than 95. 2

 

How do you begin? How do you draw retirement income off of what you’ve saved, and how could you create other possible income streams? How do you try and protect your retirement savings and other financial assets?

 

Talking with a financial professional – a female financial professional – may give you some good ideas. You want an advisor who walks your walk, who understands the particular challenges that many women face in saving for retirement (time out of the workforce due to childcare or eldercare, maintaining financial equilibrium in the wake of divorce or death of a spouse).

 

As you have that conversation, you can focus on some of the must-haves.

 

You should plan your investing. Many women (and men) retire with a random collection of investments, and no real strategy. Some are big on “chasing the return” – assuming risk they really shouldn’t in pursuit of a double-digit yield. Others are very risk-averse, so fearful of what stocks might do that they stay out of the market entirely – and in the current low interest rate environment, that represents an easy way to fall behind and lose purchasing power to inflation.

 

You need a middle ground. When you are in your fifties, for example, you have less time to make back any big investment losses than you once did. So protecting what you have is a priority. At the same time, the possibility of a 15-, 20-, or even 30- or 40-year retirement means you have to keep a foot, if not both feet, in some kind of growth investing. Your initial retirement nest egg has to keep growing.

 

You should look at long term care coverage. It is an extreme generalization to say that men die sudden deaths and women die lingering ones; however, women often have longer average life expectancies than men and can require weeks, months or years of eldercare. Medicare is no substitute for LTC insurance; it only pays for 100 days of nursing home care, and only if you get skilled care and enter a nursing home right after a hospital stay of 3 or more days. Long term care coverage can provide a huge financial relief if and when the need for LTC arises. 3

 

Claim those Social Security benefits carefully. If your career and health permit, delaying Social Security  is a wise move for single women. If you wait until full retirement age to claim your benefits, you could receive 30-40% larger Social Security payments as a result. For every year you wait to claim Social Security, your monthly payments get about 8% larger. 4

 

Married women can look at spousal claiming strategies such as the “file and suspend” approach and claiming spousal benefits first. This may help to maximize the Social Security benefits you and your spouse receive.

 

Above all, retire with a plan. Have a financial professional who sees retirement through your eyes help you define it on your terms, with a wealth management approach designed for the long term.

 

1 – http://cdc.gov/nchs/data/nvsr/nvsr61/nvsr61_06.pdf

2 – http://ssa.gov/planners/lifeexpectancy.htm

3 – http://medicare.gov/coverage/skilled-nursing-facility-care.html

4 – http://money.usnews.com/money/retirement/articles/2012/04/02/what-older-workers-dont-know-about-social-security

Why Women Are Prepared for Financial Success?

We have the ability to excel financially; it is a matter of shifting our outlook.

Statistics don’t mean everything. Read enough about women and money online, and you will run across numbers indicating that women finish a distant second to men in saving and investing. Only 42% of women save a specific amount money each month for retirement, the State Farm Center for Women and Financial Services at the American College finds. Aon Hewitt says that the average 401(k) balance for a man at the end of 2012 was about $100,000, while it was only about $59,300 for a woman. And so forth. 1,2

Depressing? Well, consider that you can be the exception. (Maybe you are right now.) You may already have the discipline and patience central to smart investing and saving.

Is making a household work all that different from making your money work for you? You may or may not have to broaden your skill set a bit to save and invest well for retirement; chances are, though, you already have some abilities you can draw on effectively.

The latest edition of Prudential’s “Financial Experience & Behaviors Among Women” study (2010-2011) shows that 54% of women either feel “very knowledgeable” or “somewhat knowledgeable” about financial products. The previous edition of the study noted that 95% of women are financial decision makers within their households, with 84% of the married women surveyed solely or jointly in charge of household finances. 3

Given that level of participation and control over household finances, is it such a stretch to believe many women could become equally financially literate in their understanding of stocks, bonds, commodities, and insurance? It isn’t a stretch, especially when you think about how much good financial knowledge is out there, some of it free of charge.

Most household financial decisions are short-term decisions. They are geared toward this month or this year, and often relate to cash flow management or debt management. The simplest step toward financial freedom for many women – perhaps the most valuable step – may be moving from a short-term financial outlook to a long-term financial outlook.

Think about becoming the “millionaire next door.” In many cases in this country, wealth is grown slowly and steadily. We all dream of a windfall, but usually individuals amass $1 million or more through a variety of factors: ongoing investment according to a consistent financial strategy, the compounding of assets/savings over time, business or professional success, and perhaps even inherited wealth.

When the focus moves from “how do we make it work this month” to “how do we make moves in pursuit of our financial goals”, the whole outlook on the meaning and purpose of money begins to change. What should money do for you? What purpose should it have in your life? What can you do to make it work harder for you, so that you might not have to work as hard in the future?

Women have the wisdom, prudence and patience to make superb investors. Understanding the financial world is ultimately a matter of learning its “language” and precepts, which will quickly seem less arcane with education. Today, do yourself a money favor and ask to talk with a female financial professional who can help you define long-term and lifetime financial goals and direct some of your money in pursuit of them.

1 – http://www.cnbc.com/id/100732440

2 – http://blogs.marketwatch.com/encore/2013/08/14/401k-gender- gap-is- bigger-than- pay-gap/

3 – http://prudential.com/media/managed/Womens_Study_Final.pdf

financially independent woman

It’s All in Your Hands

A Post-Divorce Action Plan

You have just gone through one of the most challenging and difficult periods that a woman can experience in her life – a divorce. While many things may still be in up in the air, one aspect of your life that you should make sure you’re in control is your finances.

Financial planning for divorced women is not that much different than financial planning for married couples. Several basic elements are the same. However, the differences offer both good news and bad news. The good news: you can make plans and decisions based solely on your needs and goals. There won’t be miscommunication or conflicting ideas. The bad news: it’s all in your hands. Any mistakes will be your own and a poor decision can’t be salvaged by the income or assets of a partner.

The following post-divorce action plan offers a few things worth considering:

One way to counter the bad news is to find a trusted professional to seek advice from.

After a divorce, friends are often split between spouses. Financial representatives can be the same way. If you lost yours in the divorce or never had one to begin with, it’s a good time to consider finding a professional who can help you make sound financial decisions for your new life.

To find one, start simply. Ask friends or acquaintances who it was that helped them when they went through a divorce. The attorney who handled your divorce may also be a good source for a referral. It’s important to have someone help you who has previously assisted or – best of all – who specializes in helping divorced women.

Selecting the right financial professional for you is a critical step. After all, this person will be helping you with the important financial decisions you now have to face.

Long-term care insurance may become even more important post-divorce.

Long-term care policies are designed to cover the costs of care if you are unable to care for yourself because of age or if you become ill or disabled. Long-term care is especially important for women because they typically pay more for it than men do. The reason is simple: women typically live longer than men and usually require longer care during those additional years.1

A woman’s retirement is usually more expensive than a man’s.

The reason that women usually need long-term care insurance more than men is the same reason that retirement income planning for women may be more important. Women live – on average – 5 to 10 years longer than men. Eighty-five percent of people over 100 are women.2 This means a woman’s retirement savings must, on average, be stretched out over a larger number of years.

While, in general, retirement planning for a single person is easier in many ways than for a couple, remember … you can no longer rely on a spouse’s financial resources if a mistake is made. It’s important to review your social security estimates, any pensions you have and your retirement assets. You can then compare that to the kind of lifestyle you would like to have during retirement.

Because retirement may be more expensive, you may want to make an employer-sponsored retirement plan a larger deciding factor in any job search. Also, you may decide that you must retire at a later date than you had originally planned.

Update your beneficiaries and consider using a trust to help manage your assets. People often forget to update the beneficiaries of their life insurance and retirement accounts after a divorce. If not changed, your ex-husband may stand to inherit a large portion of your assets. Also, the estate laws give certain breaks to married couples that are not available to a single person. Establishing the proper type of legal trust may be a way to pass along more of your assets to your heirs, rather than to the IRS.

Finally, after you have moved on from your divorce there may come a time when you consider remarriage. It’s important that you understand the financial effects this may have. If you were married longer than 10 years you may be collecting or entitled to 50% of your ex-husband’s social security benefit. If you remarry you will no longer have that right. While you will become entitled to your new husband’s benefit, you must know if your new husband’s benefit will be lower or higher, and how that will affect your retirement.

Remarriage can also lead to blended families, blended assets and blended income. Your new husband may have his own family from a previous relationship. A financial professional can help the two of you prepare for this blending that satisfies the financial needs of each of you, as well as your new family.

While it’s all in your hands, partnering with a financial professional can help you move on to the next phase of your life with a more solid plan for your financial future.

1. http://www.wife.org/long-term-health-care.htm
2. http://www.time.com/time/health/article/0,8599,1827162,00.html

Building Wealth image

What are an Investor’s Best Friends’?

Meet diversification, patience and consistency.

Any investor would do well to call on three friends during the course of his or her financial life: diversification, patience and consistency. Regardless of how the markets perform, they should be a part of your investment philosophy.
Diversification. The saying “don’t put all your eggs in one basket” has real value when it comes to investing. In a bear market, certain asset classes may perform better than others. Ditto for a bull market. If your assets are mostly held in one kind of investment (say, mostly in mutual funds, or mostly in CDs or money market accounts), you could be hit hard by stock market losses, or alternately lose out on potential gains that other kinds of investments may be experiencing. So there is an opportunity cost as well as risk.

This is why asset allocation strategies are used in portfolio management. A financial advisor can ask you about your goals and tolerance for risk and assign percentages of your assets to different classes of investments. This diversification is designed to suit your preferred investment style and your objectives.
Patience. Impatient investors obsess on the day-to-day doings of the stock market. Have you ever heard of “stock picking” or “market timing”? How about “day trading”? These are all attempts to exploit short-term fluctuations in value. These investing methods might seem fun and exciting if you like to micromanage, but they will add stress and anxiety to your life, and they are a poor alternative to a long-range investment strategy built around your life goals.
Consistency. Most people invest a little at a time, within their budget, and with regularity. They invest $50 or $100 or more per month in their 401(k) and similar investments through payroll deduction or automatic withdrawal. In essence, they are investing on “autopilot” to help themselves build wealth for retirement and for long-range goals. Investing regularly (and earlier in life) helps you to take advantage of the power of compounding as well.
Are diversification, patience and consistency part of your investing approach? Make sure they are. If you don’t have a long-range investment strategy, talk to a qualified financial advisor today. Please let us know by posting your comments on our Financially Savvy Women Fanpage.

House and glasses on papers

When Mediation is NOT the best choice.

As a woman it’s easy to let your feelings of guilt, desire for closure and avoidance of conflict to undermine your divorce process, especially when engaging in mediation. When the emotions are running high you may be better served with a lawyer who can intervene when you are not making the best decisions for your future.

In mediation while the lawyer can suggest steps you should take to clarify financial values they can’t do more than just suggest. You may need someone to take you by the hand and lead you to the path that is best for your future. Remember in most cases it’s not just YOUR future it often includes your children as well.

Remember that it’s important to speak to a financial advisor, before, during and after a divorce, as lawyers are legal representatives, not financial ones? Please let us know by posting your comments on our Financially Savvy Women Fanpage.

Woman looking through binoculars

What do Women Want from their Financial Advisor?

Women are now the principal breadwinners in four out of 10 families with children younger than age 18, reports Pew Research (63 percent of such women are single and 37 percent out-earn their husbands). The financial-services industry is taking notice of gender differences, and so should you.

Finding an Advisor who speaks the female language is crucial. Presentations that focus on a portfolio’s return, investment style, market capitalization and performance compared with a benchmark tend to work well with men. This style does not work with women. Women prefer a more personalized conversation that focuses on their visions and goals.

When speaking with your Advisor, do you know what you want? Please let us know by posting your comments on our Financially Savvy Women Fanpage.

Man and woman

Understanding Men, Women, and Money

For most people, money is never just money; it is a tool to accomplish some of life’s goals. It is love, power, happiness, security, control, dependency, independence, freedom and more. When two individuals form an enduring relationship with each other, money is always a partner, too.

Men and women vary in their idea of personal boundaries because they are both raised largely by women. Men have to psychologically disconnect more from women because of the sex difference; women do not have to separate so rigidly, and therefore can afford less distinct boundaries.

Second, men are raised to see the world as hierarchical and competitive. Women see the world as cooperative and democratic; they share. In addition, it is accepted that women are needy and vulnerable, while men are discouraged from such display.

When men make more money than their spouse, they believe their superior earnings entitle them to greater power in decision-making. By contrast, women who make more than their mates almost always desire democratic decision-making.

Money issues are different from other problems in a relationship. These problems are significantly more difficult to talk about and harder to resolve because of our extensive cultural conditioning. The most important thing in communication is empathy. It’s more important to be heard and understood than to have a partner agree with what you say without listening.

Mellan, Men, Women, and Money

What do you think? Can you relate? Or, is your situation different? Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

Boomer Couple in Front of Their Beach House

Women and Financial Power

Too many women lack the confidence necessary to take control of their financial lives. Women fear making investments, managing their finances, planning and monitoring their spending, managing investments, and increasing their wealth.

Why aren’t women more confident with their finances?

The answer is that women are stopping themselves from being assertive. Many women leave their financial lives to their husbands, boyfriends or parents, and because of this way of thinking, they lack financial power. Financial empowerment must come from within. Women must seize it with fervor, reflecting an unshakable determination to take control of their financial lives. You must tell yourself that you can become empowered, and that you will not let outdated notions of gender hinder your success. Keep “EMPOWER” in your mind as an acronym representing these concepts:

Education is critical
Motivation inspired by your values
Protection against risk
Ownership of your future
Work — claiming what is yours requires effort
Emotions should be kept out of decisions
Responsibility to yourself

Do you use any acronyms to motivate you with your finances? I’d love to learn about yours! Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

Gibbons, EmpowHer! Why more women are taking the financial lead