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A Woman’s Guide to Financial Planning

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Women have come a long way since the women’s rights movements of the 60s and 70s.

Today, women are graduating from college at higher ratesrepresent about half of the workforce, and occupy 29 percent of senior management roles.

Women are a true financial force, controlling over $10 trillion in U.S. household financial assets. In two decades, that figure is expected to triple to $30 trillion, thanks to the oncoming intergenerational wealth transfer from Baby Boomers to their children.

The modern woman is largely responsible for her family’s financial decision-making, and holds the majority of consumer spending power. And with this kind of economic power, one might surmise that women feel financially confident.

While the core of financial planning is the same regardless of gender — spend less than you earn, save for the future, pay off your debts — the truth is, women simply have different needs, obligations, and challenges than men.

The financial planning conversation looks different for women because women are affected by a unique set of issues. For instance, COVID-19 has also hit women harder than men: In 2020, women made up 39 percent of global employment but accounted for 54 percent of overall job losses.

There is still plenty of progress to be made when it comes to building financial confidence in women. We’ll cover some of the most common issues faced by our women clients, and our recommendations for building a successful financial strategy that helps mitigate the downside of those unique problems.

The biggest financial challenges women face

Women’s financial pictures often look quite different from men’s. The modern woman must balance a number of (sometimes competing) priorities.

Challenge #1: Investing for growth

When we look at the division of (unpaid) household labor, most women assume the role of Household Manager. Though women bear responsibility for tasks like shopping for household items, for children, and other money-related duties, recent research still reveals that women feel less confident about their investments.

Moreover, many women identify themselves as conservative investors. That means women may not be taking full advantage of the investment opportunities at their disposal, or the potential for their assets to grow. While it’s tough for anyone to deal with volatile market swings, it’s important to put your money to work! The more time you have until retirement, the more risk you can handle; your money will have enough time to recoup any short-term losses.

Challenge #2: Balancing motherhood

The “motherhood penalty” is a well-documented phenomenon. When women take a pause on their careers to raise a family, that leads to lower pay over the course of a lifetime.

Source: US Bureau of Labor Statistics. As of January 22, 2021, latest available.

Women are more likely to take on part-time work, which consequently comes with lower pay—and limited access to retirement benefits.

We also need to consider the lost wage growth, lost compounding opportunities, and slowed career trajectory to see the true cost of the motherhood penalty on lifetime income.

Challenge #3: Caregiving

Women provide the majority of informal care to spouses, parents, parents-in-law, friends and neighbors. They play many roles while caregiving—hands-on health provider, care manager, friend, companion, surrogate decision-maker and advocate.

This can lead to a slew of costs, in terms of both time and money: Not only is much of that labor unpaid, but when we put our careers on hold or reduce our working hours to care for others, it can also lead to a reduction in income.

Challenge #4: Saving for retirement

Because of issues of gender parity — including the glass ceiling, the leadership gap, and unfair laws and policies — women tend to earn less.

Additionally, 30 percent of women are not offered any retirement benefits at work, compared to 21 percent of men. As a result, women have less time and opportunities to save, missing out on years of contributions and the benefits of compounding interest that come with saving early and often.

Challenge #5: Longevity

On average, women will live about four years longer than their male partners. In short: women must manage their finances alone later in life while also living longer on less income. This can make it difficult to save enough for retirement.

Case Study: How much does an additional 10 years of retirement cost?

Aria is 35 years old and earns $130,000 per year. She has already invested $75,000 in her retirement, and would like to retire at age 65 with 70% of her pre-retirement income ($5,650 per month).

If she lives until 85…

She will need about $2.76 million. That means she should save about 15 percent of her income, or about $1,600 per month for the next 30 years.*

If she lives until 95…

She will need about $3.79 million. That means she should save about 21 percent of her income, or about $2,300 per month for the next 30 years.

*Assuming a 7% expected rate of return and no Social Security benefits.

How women can plan for a financially stable future

step 1

Begin with an end in mind

What are your personal and professional milestones that you’d like to achieve in 1 year? 5 years? 10 years?

step 2

Consider what being financially comfortable means to you.

What does your dream retirement look like?

Would you like to take care of your grandchildren, or would you rather spend months abroad?

step 3

Build your confidence around financial and investment topics.

Only 35 percent of women with at least a bachelor’s degree are comfortable making investment decisions, compared to 60 percent of men.

One place to start is with our financial podcast, Meet the Expert with Elliot Kallen. You can also browse the Prosperity Financial Education blog, where we publish informative and actionable articles about personal finance.

Finally, ask lots of questions when visiting your Financial Advisor.

step 4

Plan for the unexpected.

There will be events that happen beyond your control — things like accidents, illness, or injury. This is where insurance, including life insurance, comes in handy.

step 5

Get your family on-board with financial planning and literacy.

Be honest about your financial values and fears when talking about money with your partner. Get on the same page about your goals and expectations for retirement. And be sure you have information about and access to one another’s financial documents and accounts so you’re prepared if the unthinkable should happen to one of you.

If you have kids, talk to them about money, too. You might discuss values around money, what their definition of success looks like — understanding it may differ from yours — and how they can solidify healthy money habits from a young age. Also get them thinking about important concepts like credit, budgeting and starting to save and invest early.

step 6

Work with a Fiduciary Financial Advisor.

For many people, working with a Financial Advisor is a great way to get assistance with creating and implementing a wealth plan that takes your specific goals and circumstances into account at each stage of your financial journey.


» Meet the Expert with Elliot Kallen® podcast, Women’s Empowerment

» Money and Relationships: 7 Tips for Stress-Free Money Talks 

» Family Wealth Planning for Newly Married Couples

Enjoy clarity & financial peace of mind

At Prosperity, we’ll listen to your concerns and answer your questions. Our goal is to give you the knowledge you need to have as a woman dealing with your own unique set of financial challenges and opportunities.

Get in touch today to start the conversation!

Top financial tips for women

Think of your money as a vehicle that takes you to your personal vision of success. 

A strong financial strategy gives you the freedom to:

  • Pursue your dreams
  • Bring stability to your life and the lives of your loved ones
  • Contribute to the causes dearest to your heart
  • Handle any and all unfortunate events that come your way

Tip #1: Confidently ask for the paycheck you deserve.

What’s the easiest way to save more? Earn more. Yet, only 34 percent of women negotiate their salary during their last round of interviews (compared to 46 percent of men).

Tip #3:

Your retirement savings come before your kids’ college savings.

While it’s true that higher education costs are astronomical — and only going up — you must put on your own oxygen mask first before helping others.

Before contributing to a 529 plan, make sure you are contributing enough to your future first. While there are a variety of ways to fund college (think minority or athletic-based scholarships), only you will be paying your costs of retirement. Set yourself up for security and success first.

Tip #5:

Open a HSA.

According to a 2018 report by Justice in Aging, a woman who is now 65 years old would spend approximately $47,000 more in retirement for health care expenses than her male counterpart.

One way to prepare? A health savings account (HSA).

Your HSA offers a triple tax advantage: Your contributions, gains, and withdrawals (for qualifying health expenses) are all tax-free. And if you stay healthy until retirement, you can let the money sit and compound just like it would in any other tax-advantaged retirement account.

Tip #2:

Make automatic contributions to your retirement plan.

Between birthdays, appointments, and life in general, you have more than enough things to think about. When it comes to your retirement savings, set-it-and-forget-it is the easiest way to build up your nest egg. Remember to include an automatic increase each year.

Tip #4:

Don’t forget to roll over your 401(k)s.

Women change jobs slightly more often than men, sometimes leaving a trail of 401(k)s in their wake.

To avoid retirement plan sprawl, take your retirement accounts with you, either by transferring it to your new employer or rolling it over into a Prosperity IRA. This will make it easier to track your retirement picture, and offers additional benefits — namely, lower fees, Fiduciary guidance, and many more investment options.

Whatever you do, don’t ever cash out your 401(k): the penalties and lost compounding are not worth it.

Tip #6:

Remember that “No” is a complete sentence.

Women face a lot of demands for their time, attention, and money.

But if you want to secure your retirement, you need to learn to say “no.” Standing up for yourself with the little stuff—politely turning down the aggressive PTA leader who wants you to volunteer every other weekend—will prepare you for the harder rejections, like turning down your decades-long neighbor when she asks you to fund her new restaurant with money from your 401(k).

Conversations to have with your Financial Advisor

It’s never too late to start saving. Money is often considered a taboo topic, but it shouldn’t be. When managed intelligently, wealth can be a powerful tool for impact.

  1. Am I on track for a 30-year retirement?
  2. How can I get started with impact investing?
  3. What special steps should I take if I want to start a family?
  4. How can we shape my investment plan to best mitigate the effect of career interruptions?
  5. Could my financial plan handle the loss of a spouse, either through death or divorce?
  6. How should I prepare financially for the aging of my parents?

Women have special roles in society that many Financial Advisors fail to account for: starting a family, caregiving for aging parents, separation, divorce, and widowhood are just a few of the unique challenges faced by women.

If you need a financial plan that takes your unique life into account, reach out to me today.

Elliot Kallen


We Can Help

It’s natural to feel overwhelmed by all the life events we need to prepare for. Feeling in control of your finances can propel you in so many other areas of your life. We can help you create a long-term financial plan to build your wealth on your timeline, for your goals, in line with your risk tolerance.

If you’d like to inquire about our financial planning services, please fill out the form below and we’ll get back to you shortly. We look forward to hearing from you.

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