Understanding and managing your financial future
Whether you’re the woman of the family or there is an important female in your life, women’s involvement in financial planning is an important activity. Juggling life as a professional, a partner, a mom, a sister and a caregiver can be daunting. While women are increasingly taking charge of their own money there are still many who are unprepared, being forced to make financial decisions when life throws them a curve ball. That’s why it’s important for women to be involved in the financial decisions of the household and develop a relationship with their Retirement Specialist and/or family advisor.
The reality is that women are taking more control and looking for more information to make financial decisions for themselves and their families.
1 ”Women now control more than half of U.S. personal wealth, which ‘will only increase in years to come.” www.businessinsider.com/women-now-control-more-than-half-of-us-personal-wealth-2015-4, April 2015.
2 ”The $25 Trillion Cause: Reaching Out To Women,” http://insurancenewsnet.com/innarticle/25-trillion-cause-reaching-women, July 2016.
3 ”Women are not a niche market. They are a significant business opportunity. A Guide for Investment Professionals.” https://www.pershing.com/assets/guidebooks/women_are_not_a_niche_market.html. March 2012.
4 14th Annual TransAmerica Retirement Survey of Workers, 2014.
Women face financial challenges that differ from those of their male counterparts thus creating some important concerns.
- Outliving retirement savings
Women only plan for 20 years of retirement — underestimating their income needs.1
- Health care and long-term care (LTC)
Women are frequently caregivers which can cause increased stress levels and impact their own health. Plus, they understand the need to provide for their own Long Term Care and don’t want to be a burden on their family.
- Social Security
Social Security alone will not provide a comfortable retirement. Experts estimate that most people will need 70-90% of their current salary to maintain their lifestyle.2
- Legacy Planning
Women with high personal incomes (over $100,000) are less likely to have individual life insurance plans than men with similar income levels.5
All of these concerns and their impacts have solutions. It’s just a matter of having the conversation. Talk to a Retirement Specialist or your advisor about these and other important issues so solutions can be built into your retirement plan.
1 Nationwide Financial Retirement Institute Health Care and Long-Term Care Costs in Retirement Consumer Survey, December 2013.
2 United States Department of Labor, “Top 10 Ways to Prepare for Retirement.” www.dol.gov/ebsa/publications/10_ways_to_prepare.html. June 2015.
3 Nationwide® Healthcare and Long Term Care Study, November 2014.
4 The 2011 Sourcebook for Long-term Care Insurance Information — AALTCI, 2011.
5 ”You’ve Come A Long Way…” Insurance Information Institute (03/15), www.iii.org/press-release/youve-come-a-long-way-but-do-you-have-enough-life-insurance-celebrate-womens-history-month-by-financially-protecting-your-family-030515.
It’s smart to collect and organize your important documents, especially these five. They will protect you medically and financially, ensure your estate is properly handled and help provide you with the best care.
- Last Will and Testament
If you or your parents don’t have a will, the state will decide how their assets are distributed. This can take years and the result may not meet verbalized last wishes.
- Financial Power of Attorney
This legal document allows you, or another trusted person, to pay bills on your parent’s behalf or ask about their finances. You should also set this up for yourself with your children.
- Living Will
A living will is a written statement detailing a person’s desires regarding their medical treatment when they are no longer able to express informed consent. Examples include permanent unconsciousness or a terminal illness. If you have a specific advance directive, like do not resuscitate, this is the document with which to capture those desires. Not having a living will can create a crisis point for your family. You can help avoid this by outlining your own or knowing your loved ones’ wishes.
- Health Care Power of Attorney
If you’re unable to speak for yourself (a case of advanced Alzheimer’s would be one instance), you want a trusted individual to be able to step in to make decisions about your health.
- Health Insurance Portability and Accountability Act of 1996 (HIPPA) Privacy Forms
Put loved ones on your HIPPA forms so you both have access to information.
Source: McVicker, Barbara. Before Things Fall Apart: The Essential Workbook on Caring for Mom and Dad. 2012.
Life changes. So sometimes alterations to your financial strategy are needed. Knowing how to pivot during these changes can help you take charge of your financial future.
Divorce can be an emotionally difficult time, but you can set yourself up for success.
Take control by:
- Collecting and reviewing financial documents like check registers, titles and any financial data that may be stored online.
- Working with a financial advisor, attorney and/or insurance professional to help guide you through the money side of things.
- Updating beneficiary information to reflect your current wishes.
Death of Spouse/Partner can create a new financial reality that may include responsibility for managing your family’s financial decisions.
Take control by:
- Capturing all account information and reacquaint yourself with forgotten assets.
- Reregistering your financial accounts in just your name.
- Updating beneficiary information.
Entering Retirement can be exciting. Planning ahead can give you peace of mind so you can focus on what matters most.
Take control by:
- Paying down expenses like your mortgage, car loan and other debt.
- Maxing out contributions to your retirement account if you’re still drawing a salary.
- Looking beyond your home’s value as a retirement fund. The real estate market can be volatile and may be a risky source of retirement income.
- Creating a plan for how and when you’ll draw income from different sources. This may include your retirement plan, pension, Social Security, IRAs and more.
Caring for aging/sick parents is never easy and planning for long-term care can be a trying time.
Take control by:
- Discussing care options with your parents before they are necessary
- Taking care of yourself. If you don’t take care of yourself, you are not going to be able to care for others.
- Doing research into government subsidies. Consider hiring an eldercare attorney to help.
- Being realistic about what you’re willing to handle and what can be hired out.
Receiving an inheritance usually occurs at a time of personal loss. But keeping your financial goals in mind as you prepare to receive the inheritance can help take emotion out of the equation.
Take control by:
- Paying off high-interest debt like credit cards, student loans and home equity loans.
- Establishing an emergency fund to cover living expenses for six months.
- Funding your retirement savings
- Accelerating the payoff of your mortgage
- Contributing to your kids’ college fund
- Planning a financial legacy to your loved ones
Marriage/Domestic Partnership can be rewarding. But don’t forget to consider your own financial goals — inside and outside your relationship.
Take control by:
- Being open about how you’ll spend money and who will pay for what.
- Reviewing and updating beneficiary plans, power of attorney, health care proxies and other similar documents.
- Forgetting about traditional gender roles when it comes to discussing your marital finances.
- Maintaining a certain degree of financial independence.
Build your financial confidence
As a woman, you face financial challenges different from those of men. From longevity issues to health care costs and understanding how to use Social Security to your advantage, there’s never been a greater need for women to build their financial confidence.
Talk to your Retirement Specialist or trusted advisor so you can be ready to make the right decisions for the future you want.