Women, Money, and Life Issues

Political strategist Hilary Rosen set off a firestorm when on CNN’s AC360 program she said that Ann Romney “never has worked a day in her life.”

 The brouhaha was symptomatic of the growing clout of women in the marketplace, community affairs, business, politics, and finance. A spate of recent articles in InvestmentNews (April 9-13, 2012) and Journal of Financial Planning (April 2012) contained revelations about the concerns of women. The data is pertinent to the conversations that financial advisors should have with female clients, recognizing that the challenges women face are myriad.

Women comprise 51% of the U.S. population and roughly 65% of the workforce. Women are the sole heads of 32% of American households. Sixty percent of college students are female and women increasingly are represented in the accounting, legal, and medical professions.

Susan Frabry, senior design strategist at Continuum, notes that women control 65% of global spending and more than 80% of U.S. spending. Females rule the blogosphere and are quick to share opinions—positive and negative—about experiences with products and services. (Business owners take note!)

Women are holistic when it comes to buying decisions. They want to ask questions and be asked questions; they want a real conversation; they want to be educated.

Women worry about financial security. A survey of 550 wealthy women by Family Wealth Advisors Council indicated that 54% of married women consider health a major risk relative to their financial future. They worry about the death of their spouse as a major risk. In counseling families, often we find that disability insurance is lacking or inadequate, and life insurance face amounts will not deliver sufficient financial horsepower given the death of a breadwinner. A surprising number of parents—single and married—do not have wills and have not provided for children.

Betty Meredith, CFP®, CRC®,  director of education for the Institute for Retirement Education (InFRE) says that the #1 retirement issue for women is the threat of poverty. Seventy-one percent of people age 85 and older are woman and the median income for older women is $15,248, only 53% of that of older men. Early in the planning game, women need to focus on retirement income-building vehicles, insurance on spouses, Social Security strategies, estate planning, and the tenets of financial freedom.

Caregiving is the #2 issue. Of unpaid caregivers, 57% are caring for parents, and over 70% of caregivers are women. Says Meredith, “When women assume caregiver roles, they are 2.5 times as likely to end up in poverty as noncaregivers; single caregivers are four times more likely to end up in poverty than married women.” The Family Care Conversation™ is a key element in any discussion of financial security, for both the boomers and their parents. Understanding the ins and outs of long term care insurance is important in the planning process.

Divorce is the #3 issue, as women recognize that “divorce derails retirement.” Meredith points out that a pension earned during marriage is a joint asset. She advises, “The temptation might be to go for assets of a higher present-day value, but securing the right to future retirement income could mean the difference between a comfortable retirement or teetering on the edge of poverty.”

Social Security in 2010 accounted for about half of all income for unmarried women 65 and older, including those widowed, divorced, or never married. Timing as to when a person takes Social Security makes a difference in retirement security. Waiting to full retirement age can make a huge difference. If divorce is contemplated, sticking it out past the 10-year mark makes a difference in benefits.

Boomers and their parents—men and women—seek solutions to the real life challenges associated with aging. Women, who know that the odds of being alone in old age are significant, want help in navigating longevity. They want financial and psychological security. It all starts with a conversation, followed by a living on-going holistic plan!

Lewis Walker, CFP® is a financial planner and investment consultant with offices in the Forum on Peachtree Parkway in Peachtree Corners; 770/441-2603, lewisw@theinvestmentcoach.com.