Women Need to Plan Now for Stable Financial Future
Apr 30, 2019 10:04AM
● By Hilary Daninhirsch
When it comes to women’s financial health, there are some sobering statistics.
• In 2017, the National Women’s Law Center reported that more than one in eight women—representing over 16 million women—lived in poverty.
• A literacy study conducted by the American College of Financial Services found that only 18 percent of women between the ages of 60-75 passed a retirement income literacy quiz, compared to 35 percent of men in that same age group.
• Women, on average, earn 20 percent less than their male counterparts.
While women have achieved great strides in the workforce and in education levels, a number of variables nonetheless can affect women’s financial stability.
Donna Kline, a financial advisor and Certified Divorce Financial Analyst with HBKS Wealth Advisors, reported other revealing statistics:
A survey conducted by Fidelity said that 92 percent of women had a desire to know more about the household finances, but only 47 percent said that they’ve actually reached out to an advisor. Another 60 percent worried about not having enough money for their retirement. Roughly 32 percent of women feel uncomfortable discussing money, and 16 percent felt that the topic was just plain ‘taboo.’
“Women will talk to a doctor about virtually anything, but with money, we’re still shy,” said Kline.
According to Traci Conlon, a financial advisor with Edward Jones, it is not uncommon for women to defer financial responsibilities and bill paying to their spouses.
“In general, women control the daily household finances for their operating budget, but I’m always surprised that so many women do not want to be involved in planning for long-term investments," she said.
In fact, Conlon added that nearly every day a male client will tell her that his wife did not want to join him for their investment appointment or that she defers all of the finances to him. “I’m trying to change that, one woman at a time,” Conlon said.
She hypothesized that part of the reason for this might be because male advisors dominate the financial industry.
“Many women do not connect with male financial advisors or feel that the men talk over their heads, and that doesn’t feel good. Why would a woman want to go to that meeting if she is not respected as an equal?” she asked.
Another factor could be gender role assignments in the family. “When you’re out of the workforce for 10 years, your earning ability has likely decreased; the amount of time you’ve had to build a nest egg for yourself has decreased, and that should be accounted for in a financial plan,” said Kline.
This disconnect appears to happen more with women over the age of 55. “I find that my younger female investors are more involved than my older female investors,” said Conlon.
But even if the man in the marriage takes care of the finances, it is imperative that women know what accounts exist, how much money is in the accounts, and how to access them if need be. This is especially imperative when the divorce rate is so high.
“The divorce rate among couples over the age of 50 has doubled over the last 30 years; a lot of older women are finding themselves divorced without an income,” said Kline.
This ‘gray divorce’ phenomenon means that women have had less time to contribute to their share of the marital assets before retirement and may have to work longer than planned.
Marriage can also end in death; Kline said that the median age for a woman to be widowed is at 59. As difficult as it may be to discuss that possibility, income and asset protection are very important conversations to have with an advisor early in the relationship. “It is one thing to delegate tasks in a family, as people do that all the time, but women still need to be aware of overall finances; it is critical,” said Kline.
Conlon agreed. “Women need to be involved and to know what is going on, because those assets will eventually become her assets. Those long-term assets will become a woman’s operating budget moving forward, so she’s going to want to plan for that.”
Though this is a generalization, women are often thought to be more cautious in life and in finances. “Generally, this makes women better investors because they are more averse to risk; they’re not looking for that shot in the arm but that slow and steady growth,” said Conlon, adding that the hallmark of a good investor is someone who thinks about the long-term.
As the saying goes, knowledge is power. The first step that women need to take is to become educated when it comes to finances—especially their own financial situations.
There are workshops and books and online tutorials and seminars available, but perhaps the best way to become educated is to find a financial advisor who makes them feel comfortable.
“Advisors are on public record; you can look them up for their track records. An independent advisory firm, which is different from a brokerage firm, has a fiduciary responsibility to act in the best interest of the client,” said Kline. She also advises women to get over the fear or stigma about having financial conversations.
It is also important to find a lawyer who can help with estate planning. “Having a relationship with an estate planner is important,” said Kline, “especially when things change.”
Maureen Gluntz is an Aspinwall-based attorney who specializes in estate planning, estate and trust administration, and estate and fiduciary taxes. She counsels clients on estate planning, and helps clients analyze how their financial assets are titled as well as beneficiary designations on retirement planning assets and life insurance policies.
“A lot of times, I find that people don’t really look at those things very closely or haven’t looked at their beneficiary designations in quite some time. In addition, people don’t ask the right questions of their financial advisors to make sure that the beneficiary designations are appropriate,” she said.
“I find primarily with older clients, it’s most often the husband who handles all of the finances and the investments,” she added. “When the husband passes away, the surviving spouse is left completely in the dark about what investments they have. They’re sometimes faced with options with regard to retirement plan distributions, and they are often ill-equipped to deal with these decisions.”
Estate planning is particularly crucial in the event of a second marriage, especially when both spouses have children from prior marriages and want to make sure that their own children are provided for. “If everything goes to other spouse, then essentially that predeceased spouse’s children may be completely disinherited,” said Gluntz.
She added that is it a common misconception that surviving spouses automatically inherit assets, particularly if one spouse owns assets in his or her own name. That is why it is crucial that every individual create a will regardless of how large a person’s estate is.
“You need to know that your finances are structured in such a way that your income needs are met and that you’ve saved for retirement and other contingencies,” said Gluntz.
“This is your money,” reminded Conlon. “You shouldn’t rely on or leave that up to someone else to determine your goals.”