She’s Getting Her Money Up
In 2018, I decided to get divorced.
At the time, I was married to a wealth management professional and I had happily turned over the finances to him when we got married.
I was lucky. I was married to someone who was smart (a Wharton grad!), inclusive when it came to asset ownership and decision-making, and overall, painstakingly transparent when it came to our finances - and when we divorced, he was equally forthcoming and fair as we unraveled our financial lives.
He works with individual households in his capital management business and when we were married, he would come home from time to time frustrated with the men who solicited his services, but wanted to leave their wives out of it - or refused to talk about core financial topics like insurance because: “I’ll be gone any way - what do I care?” It really upset him - and upset me! Incidentally, he would refuse to work with these types of clients.
This month, Tess and I want to dig deeper into money topics that impact women and I wanted to touch on a few of what I think most professionals would identify as core areas, but for women, are absolutely vital to empowering and protecting ourselves financially.
First off, money topics make a lot of people uncomfortable and some of us have real trauma around money. However it is coming up for you, it’s OK. Our experiences shape how we take in information and if you feel triggered, pause and come back to it when you’re ready.
Women are, in fact, financially literate despite how we are portrayed or how we are compared to men. However, even those of us who are confident in our skill set, can sometimes feel vulnerable when it comes to these matters, but we need to take this on without hesitation.
For this piece, I will focus on long-term planning and topics specific to women that don’t always get covered in general articles.
The following is a reflection of my personal, informed opinion and experience, and should not be treated as professional advice.
Retirement planning starts NOW
If you’ve never played an active role in planning for your retirement, it’s never too late. Yes, of course, it’s ideal if you could have done so when you were in your 20s, but that doesn’t mean you can’t make impacts now if you start to dig in.
Whether you work with a professional* or not, there are some simple things you can do to get a sense of where you are right now. Understanding how much your life costs today and anticipating what you would spend in retirement - accounting for costs that go away (e.g. child care, etc.), accounting for inflation and increased health care costs, etc. - is the first step.
How long should I plan for? The current life expectancy for women is about 81 years, almost 5 years longer than men, but you may have family history that indicates something else. You should always assume you’ll live longer, but this data can guide you on how long you need to plan for.
If you’re married, widowhood is a consideration, so insurance is something that should be discussed with your partner especially if you aren’t working or you don’t have enough in retirement assets to support you if something were to happen.
Once you have an understanding of what you need to live once you retire, and for how long, you can estimate your retirement age based on your investments and savings. Don’t forget social security which you probably can’t live on, but will subsidize your retirement. You can access your latest social security statement at www.ssa.gov.
What happens if I can’t stop working when I want to because I won’t have enough? Think outside of the box.
There are lots of different types of retirement outside of what we would define as “traditional” retirement where you stop working and don’t return.
Here are a few:
Semi-Retirement: This involves reducing work hours or responsibilities while still continuing to work part-time.
Temporary Retirement: This is a break from work, often for a set period, allowing for a change of pace or a focus on personal pursuits.
Phased Retirement: This involves a gradual transition into retirement, often working part-time while receiving a portion of your retirement benefit.
MAX out your salary
The fuel for your financial independence IS your salary.
Women are already the victims of a gender pay gap that hasn’t moved in 20 years and accounts for 18% less in pay than their male counterparts. This is why it is critical to negotiate salary and take advantage of additional compensation benefits like 401K and Stock Purchase programs that typically include a % match to your personal investment. This is FREE money. Don’t leave it behind.
If you need help with negotiating pay, check out our podcast and free guide on how to get paid what you’re worth.
SAVE for Special Circumstances
Because most women take responsibility for caring for children and aging parents, and because we are often at a disadvantage when it comes to divorce, we need to save more than our male counterparts to account for these challenges. When considering what you need to have for an emergency fund or for retirement, account for these needs.
For emergency funds, three months of expenses in savings is good, but six months is better - and depending on what type of work you do, 12 months may be more appropriate.
What you want MATTERS
Don’t wait when it comes to estate planning.
Whether it’s who you want to care for your children, how you want your assets to be distributed or how you want decisions to be made regarding your care if you can’t speak up for yourself, you need a comprehensive estate plan that includes your Trust(s), Last Will & Testament, Powers of Attorney, Advanced Healthcare Directive and anything else that you may need to manage and execute your estate in the way you want.
When I did my estate plan, I was dreading it. I didn’t want to think about these nightmare scenarios and think about what I wanted to happen. But once I did, I slept like a baby. I know that if the unthinkable happens, everything is in order - and that I am caring for my family by doing so.
There are also tax advantages available to you by structuring your estate in certain ways, so it makes good financial sense, as well.
You can build your plan with the help of an estate planning attorney who usually charges a one-time fee for your initial plan - which you can then review from time to time to make any changes you feel are necessary.
Put Yourself in control
Financial independence is our power - and in a world where the mood seems to be in keeping us reliant and dependent on a system that doesn’t serve us, we need to pay attention and work towards these important goals to empower ourselves and direct our own futures.
*I am a big believer in leveraging a Certified Financial Planner for investing and retirement planning because they are regulated by the SEC and have a fiduciary responsibility (enforced by law) to treat your money as their own - and you pay them a % of your investments versus them taking kickbacks from companies peddling financial products that may not serve you. You can learn more at www.napfa.org.
Many CFPs also have professional contacts that they can direct you to for estate planning, insurance and other needs that may come up as you build your plan.
