If you missed last week’s blog post with important statistics about women and money, you can read it here. In that blog post I discussed why it’s important for women to give themselves a financial education and raise their financial literacy.
This week, I’m going to elaborate a bit more on that and talk about women and aging. It’s typically not a favorite topic. Women don’t usually like to talk about money, and they certainly don’t like to talk about aging. It’s usually two of their least favorite topics.
However, the statistics show that it’s important for women to do everything they can to raise their financial literacy in this area.
Did You Know?
Did you know that every fifth adult in the United States is a female over 50? (Source: U.S. Census Bureau)
Or that women over 50 control a net worth of $19 trillion? (Source: MassMutual Financial Group)
Over the next decade, women will control two-thirds of consumer wealth in the United States and be the beneficiaries of the largest transference of wealth in our country’s history. Estimates range from $12 to $40 trillion. Many Boomer women will experience a double inheritance windfall, from both parents and husband. (Source: Fleishman-Hillard New York)
American women over 50 are the healthiest, wealthiest and most active generation of women in history. (Source: Demographics by Mark Miller)
Once college bills are paid, women over 50 spend 2.5 times what the average person spends, and are primary buyers of computers, cars, banking, and financial services. (Source: Marti Barletta, “PrimeTime Women”)
Statistics also show that 80-90% of women will be solely responsible for their finances at some point in their lives - mainly due to divorce and the fact that women typically outlive men. (National Center for Women and retirement research).
Women Live Longer
When you look at life expectancy statistics worldwide, every single country that’s reported shows a longer life expectancy for women than for men.
The US Census Bureau shows that the average age of widowhood in the US is 55 years old.
What this means is that women around the world, whether they have a financial education or not, will at some point need to make financial decisions. They'll need to make financial decisions about the family finances, inheritances, retirement, managing the family home, and more.
In the past I’ve mentored many women regarding real estate transactions and what to do with their homes or rental properties after their husbands died. Many of these women had never been included in the conversation about the cost of managing the home, rents collected, tax advantages and penalties, or whether the home was even cash flowing or not.
Not only were they not included in the conversations before, but now that they were widows, they were put in a position to make all the financial decisions. It was overwhelming for them.
Shouldering More Financial Decisions About Retirement
The way we invest to retire is different today than it was 40 years ago. Women (and men) are shouldering more of the financial decisions when it comes to retirement planning.
Past generations relied on a pension plan to fund the bulk of their retirement. Pension funds were managed by professionals, and the burden of the financial decisions were on the companies or governments that sponsored them.
The employees benefiting from the pensions were not involved in the decision making. Nor did they contribute their own funds. Therefore, they were rarely made aware of the funding status or investments held by the pension.
Since then, and as a result of the ERISA Act of 1974, pensions are a rarity, especially for new employees.
Instead of pensions, employees now have opportunities to participate in 401(k) plans, in which they need to make investment decisions. They need to decide how much to contribute, and which investment options they choose, based on the options offered by their plan.
When it comes to investing for retirement, aside from the 401(k) plan decisions to be made, women are being asked to choose among various savings and investment products. These products are more sophisticated than in the past. Consumers must choose among different options offering varying interest rates and maturities.
Often, women haven’t been adequately educated financially to make these decisions. Deciding on complex financial instruments with a large range of options can impact your ability to buy a home, finance an education, or save for retirement.
This adds to the stress of financial decision making.
Another statistic that is important for you to know, is this: Social Security provides over half of women’s income over the age of 65, 67% to be exact. (Social Security: Especially Vital to Women- IWPR analysis of the 2010 Current Population Survey Annual Social and Economic Supplement).
If it only provides a little over half of women’s retirement income, then you must have a plan in place for generating the rest of it. Right? What's your plan?
So Now What?
If you don't know where to go from here, you are not alone.
We spend time, energy and money going to college, job training, educating ourselves on hobbies, parenting, relationships, pet ownership, etc.
Truthfully though, how much time, energy and money have you spent giving yourself a financial education? Do you read books about investing? Do you listen to podcasts? Have you studied the stock market and done research on what you’re invested in through your IRA, 401(k) or 529 plans? Are you watching your money or are you leaving that to someone else?
Ladies, it’s time. It’s time to educate yourself financially.
If you don’t know where to start, I’ll help you. The first step is to set a solid financial foundation. My online course Financial Foundations for Women is a step by step program that will educate you on the financial basics that are so essential to building wealth.
We’ll talk about how your mindset is keeping you from your financial goals and how to overcome that. I’ll teach you how to set goals and achieve them. We’ll also discuss the practical steps to raising your credit score, paying off debt rapidly (including your student loan), and investing for your future.
I’ve spent hundreds of hours learning what I’ve learned, and tens of thousands of dollars. I’ve read books, listened to podcasts, had coaches in both mindset and investing, and attended seminars and conferences on these topics.
If you're not ready to invest in yourself yet, there are other things you can do to get started. You can go to the library and check out books for free, get audiobooks, read hundreds of blog posts (be sure to follow this blog for my past and future content), listen to money podcasts, and more. But if you want to be a part of a community of women supporting each other’s financial goals, and learn how to build a solid financial foundation, then start with the Financial Foundations for Women course. It is a financial game-changer, for sure.
Whatever you do, do something. Every day that goes by without you taking action, is a day without compound interest.
Don't put it off, because life goes by so fast. Just ask my 96 year old grandmother. She is living the life she wants now because she made smart financial decisions after her divorce at the age of 58. Wherever you are in life, it's not too late to start investing and planning for retirement now.