Women Face Unique Financial Challenges. If you were to guess which issue women worry about most, would you guess family, health, time, stress, or maybe equal rights? According to a March 2000 gallop poll, the answer is their finances. This response may surprise you now, but consider the following list of financial issues unique to women.
Consider these results from a women-and-money incubator, and research by Bruce W. Most and William L. Anthes: - "Women are more intimidated than men about financial issues - Women earn less money than men - Women are less prepared for retirement - Women receive smaller retirement benefits - Women live longer than men - Women are poorer in retirement than men - Women are more conservative investors than men"
We would also add - Special difficulties for single mothers - Women caring for elderly parents - High-deductible health insurance plans cost women more - Women may defer to men regarding financial decisions - More women manage daily family finances - Retirement issues because of divorce agreements - Male-dominated financial services industry
Earnings Differences It is a well-documented fact that women earn less than men do. A study by the American Association of University Women Educational Foundation as reported by Ellen Simon {AP}:"Women make only 80 percent of the salaries their male peers do one year after college...10 years after college, women earn only 69 percent of what men earn...Even after controlling for hours, occupation, parenthood, and other factors known to affect earnings," the study found that one-quarter of the pay gap remains unexplained.
Most and Anthes report that "According to the U.S. Department of Labor, women working full-time, year-round, earn roughly 74 percent of what men earn... (and) workers in the age category of 45'54-the prime earning years for most people-women earned $516 a week while men earned $732." It gets even worse for single mothers with young children whose "median income in 1998...was $14,248. This figure is the lowest among all family types, representing roughly one-fourth the median income of married-couples with children...and approximately three-fifths that of females with no children."
Retirement Differences Women are often less prepared for retirement than men. Most and Anthes also noted that a study that found 58 percent of baby boomer women had saved less than $10,000 in a pension or 401(k) plan, while baby boomer men had saved three times that. In addition, the fact that women live longer than men means that they need more money in their retirement than men do.
Investment Differences Also, a 1997 study by Dryfus and the National Center for Women and Retirement Research showed that women investors were more worried than men about running out of money in old age, preferred more conservative investments, wanted fixed/steady returns, were more unnerved by stock fluctuations and worried more about investment decisions.
Social Security Retirement Differences Of course, less money earned by women, means less money saved for retirement or contributed to Social Security benefits, and because women live 79 years on average while men live 72, women retirees are poorer in retirement than men. Most and Anthes note that according to the Administration on Aging "...half the elderly widows now living in poverty were not living in poverty before their husbands died. The picture is even worse for older women in many minority groups".
Decision Making The next generation of retirees may have been raised in an environment in which men handled the money decisions. More women actually pay the weekly bills, but they may have little knowledge of the larger family finances such as retirement plans, Social Security, IRAs, insurance, annuities, etc. because they may have deferred to their spouse's decisions.
It is essential for women to understand the ?big picture' of their finances, especially for retirement, divorce, or death of their spouse. Because women make less than men, are less prepared for retirement, and receive smaller retirement benefits, they need to make sure that their husband's retirement benefits will pass to them if their husband dies first. Because women may be more intimidated about asking questions of their attorney or financial advisor, they may miss crucial details (such as single-life annuity which may bring higher levels during the husband's life but that ends when the husband dies first), or incorrect beneficiaries on life insurance policies.
Divorce During a divorce, women may be more concerned about custody issues and keeping the house than their future retirement and may agree to forgo the 401(k). Single parenting brings a whole host of financial challenges, including lost wages from parenting responsibilities and childcare and babysitters. If the extra expenses and possibly lower income are not included in the divorce settlement, the single mother may find that she is unable to keep the house and she loses the two most valuable assets: the house and the 401(k).
Health Insurance Women not only make less money than men, their health plan may cost more reports Mike Stobbe {AP}. When an employer changes to a high-deductible plan, it costs on average $1000/year more for women than for men due to mammograms, the cervical-cancer vaccine, Pap tests and pregnancy related services. This is unfair, but while the inequity exists, women must make an extra effort to contribute the difference to a Health Savings Account or savings program to avoid using credit to pay for the added medical bills. We have personally experienced the $4,000 deductible per year health insurance plan and, although it is better than no insurance, it can certainly make a dent in the family budget.
Care Giving Another huge drain on women's finances is caring for their aging parents. More women care for aging parents than men. However distasteful it may be to condense a daughter's love for her parents into a discussion of money, this issue must be addressed so that women can prepare. Because of the aging baby-boomer population, these numbers will soon become staggering. If you add caring for young children into the mix at the same time, the financial results can be devastating.
What Should Women Do? Because of the special issues facing women, it is crucial that women educate themselves about finances and the realities of financial gender inequity and plan for their future. The male-dominated financial services industry is just beginning to realize the unique financial planning issues for women. Make sure that your trusted advisors understand these issues and are helping you plan accordingly. Don't be afraid to ask your advisors questions.
Summary Now is the time to begin planning for the future: - Have a plan - Increase your knowledge and understanding of financial matters - Utilize trusted professional advisors to implement your plans - Regularly monitor your progress.
If you're like a lot of people living in the U.S. today, you probably haven't saved nearly as much as you can or should at this point in your life. Whatever the reason may be -- and there are plenty of reasons or excuses -- saving money is a discipline that too many of us have ignored, forgotten, or never learned. Overall, the working population in our country has recently been experiencing a negative annual savings rate. A negative savings rate simply means we are spending more money than we earn, and we're borrowing the money to make up for the shortfall.
The U.S. economy has long been known and admired as one of the greatest consumer economies in the world. We are privileged to live in "the land of opportunity." But we have also become accustomed to believing that opportunity is something we should expect rather than respect, and too many of us have squandered our personal financial resources in favor of instant gratification. In short, we have become spoiled.
In recent years, we've seen numerous lending companies and financial institutions offering a variety of interest-only loans and other creative come-ons to entice us to buy things we really can't afford. As of this writing, we are facing economic recession in part because of the huge problem with overextended mortgages and other bad consumer debt. We have allowed ourselves to live beyond our means.
Lending companies will always look for new ways to make money at our expense. But it is our personal responsibility to commit to such offers only if we understand the consequences and are willing to accept responsibility for the commitment. Have you ever heard the term "caveat emptor?" It simply means: Buyer beware. Remember it, and the advice will serve you well. Risky financial products and services wouldn't exist if enough of us were smart enough not to buy them.
The situation has become so untenable that our federal government is now stepping in to help those of us who committed to mortgage loans we couldn't afford and the finance companies who offered them. Who do you think is going to pay for it? Is it any wonder that the real estate market has suffered? And why do you see so many advertisements for companies that will help you get out of credit card debt for less than you owe? Just like the mortgage crisis, credit card debt has also become a serious and growing problem, and if you're in their target audience then you are also part of the problem.
Abdicate your personal financial responsibility now, and you will eventually pay the price later when you seek credit for a new mortgage or need financing for some other important obligation. Ultimately, we all pay the price for those who neglect responsibility or mismanage their debt obligations. The last thing any of us should do is look to government agencies for help. (After all, how good are they at managing our money?) Look in the mirror, first. And if that doesn't help you come to your senses, then think of your family's future.
It's a house of cards? The U.S. dollar has crashed on the world market because the Fed has had to drop interest rates to compensate for our bad habits and internal economic weakness. Such a condition doesn't make investment in the U.S. dollar attractive to anyone on the global stage. As a result, the U.S. stock market has also followed suit in the decline? Where do you have your 401k or IRA retirement savings? I'll bet it's primarily invested in the U.S. stock market. Historically, that's a good long term choice, and there's no reason to suggest that it won't be in the future. Recessions will come and go. But if we continue to let our debt obligations get out of control, our financial future will certainly not be a comfortable one.
What can you do? ?Save before you buy. Learn from past mistakes. Stop relying on credit cards, and don't commit to anything you may not be able to afford now or pay for in the future. Take on a second job if necessary to pay off your existing consumer debt. Create your own personal financial plan and stick to it. Set up a budget that works within your plan, live within your means, and look for sound opportunities that can satisfy your future financial needs within your ability to save and your tolerance for risk. Never expect or ask anyone else to "bail you out" of a bad personal decision (especially the government). Look before you leap, and take responsibility for your own actions or inactions before you blame someone else for your misfortune.
Both Kent Irwin & R Gunnar Gelotte are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Kent Irwin has sinced written about articles on various topics from Retirement, Finances and Property Guide. Kent E. Irwin, ChFC, CLU, CAP, co-founder of eFinplan.com. eFinPLAN is the first and only web-based comprehensive consumer designed for people w. Kent Irwin's top article generates over 6600 views. to your Favourites.
R Gunnar Gelotte has sinced written about articles on various topics from Retirement, Family Travel and Debt Reductions. R. Gunnar Gelotte is a semi-retired Phi Beta Kappa honors graduate of the College of William & Mary in Virginia, with over 25 years experience as a corporate controller and personal money manager. He currently resides in Nashville, Tennessee. For an easy. R Gunnar Gelotte's top article generates over 1900 views. to your Favourites.