Amy Braun-Bostich was recently quoted in this NerdWallet article called "How Women Investors Can Rewrite Their Financial Futures", and wrote this blog post as a follow-up piece with her full thoughts---
In this day and age, women are increasingly aware that they need to be involved in finances. At Braun-Bostich & Associates, we serve several couples where the woman makes most of the investing and financial decisions. Here are some strategies that can help women investors overcome the gender gap, take hold of their finances, and better prepare for retirement.
A married woman or previously married woman can utilize Social Security claiming strategies to help mitigate retirement income shortages. They can also make sure the higher income spouse has insurance (life and disability) to compensate for a spouse’s death or disability, and/or continuation of alimony or child support payments.
If a woman is single (with or without children), she can work on cash flow management to ensure that she can invest the appropriate amount to reach her goals.
Single women with children should budget according to need, and not overcompensate for the lack of a second parent in the household by spending too much on the children. This is where planning comes into play. Spending on vacations, extra-curricular activities, sports, and preparing for post-secondary education needs should be considered, but not to the detriment of their own retirement planning. This is a situation that I see most frequently occurring and is not specific to single clients, as I see couples making the same mistakes.
Longevity can be an additional strain for women planning for retirement. On average, women live 3 more years than men. Utilizing a Health Savings Account to pay for post-retirement medical expenses, incorporating guaranteed annuity income, working longer (taking care of their health so they can do so), deferring Social Security benefits, and maxing out on retirement plans are all effective tools. In addition, utilizing Long-Term Care insurance with Homecare benefits will allow them to stay in their homes longer, especially if there is no longer anyone living with them.
Equally important for women (or really anyone in a single-income household) is to establish robust cash reserves to offset the loss of a job or a need to step down from a higher-paying job to take care of their family.
Women should also consider starting a small business, if they are so inclined, to give them more income (even if it is only additional income to their primary job). Being a business owner provides more flexibility to better manage professional and personal demands.
Managing cash flow is the most important indicator of future goal success. Setting priorities and reducing unplanned discretionary expenses can be the difference between goal achievement and goal reduction. By reduction, I mean changing the goal downward or lengthening the time to accomplishment.
A woman that has been out of the workforce or has earned less may need to work longer and put away more money. This is especially true if she adopts a conservative risk tolerance. Many women are more conservative than their male counterparts, which helps them stay the course but also may interfere with goal achievement because their returns over the long haul may be lower.
Most people do not utilize tax reduction strategies, Roth investments, or do comprehensive planning. They also neglect completing estate documents. Clients working with proficient financial advisors do all the above, which gives them an advantage in accomplishing their goals.
Although these issues most frequently affect women, they also often affect couples. I usually do not guide females differently than males. At Braun-Bostich & Associates, we treat each client equally – as individuals – and provide them with what they need. Some clients require more education and hand-holding, while others just want the bottom line.
As always, if you have any questions about any of this information, please do not hesitate to reach out.
To discuss this content further or to ask any financial-life question you may have, we encourage you to reach out to us at 724.942.2639 or schedule a FREE/no-obligation time to chat with an advisor at your convenience.
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