Women, wealth & retirement: Planning for financial security

Women and Wealth

 

When it comes to managing their personal financial lives, women have come a long way in recent times. This is beneficial because women bring a unique perspective to money matters and issues related to financial security. At the same time, they must deal with complications that can make their goals more difficult to achieve.

Whether planning for retirement, building your career or working inside the home, you have a number of factors to consider as you determine your financial path. This is especially true when it comes to determining how to build a secure retirement.

Women provide a unique perspective

It is perfectly normal for women to view financial matters differently than their male counterparts. The key is to embrace these differences and approach your decision-making process with confidence.

According to financial writer Holly Buchanan, women tend to exercise a more deliberate decision-making style. They often excel at planning ahead and determining what could go wrong.1 By contrast the decision-making style for men tends to be more immediate and involve less of a thought process. Buchanan calls women more “risk-aware,” valuing safety and security.

Developing awareness of your unique financial perspective and decision-making style can bring clarity to your retirement planning process.

Finding the right balance

Women often face pressure to balance work and the role of primary family caregiver. This sometimes means having to make a decision about whether to leave work altogether to help manage family matters.

If you are weighing the option of leaving work for a time, there are many factors to consider. These range from putting your career on hold and potentially moving off of a promotion track to the loss of 401(k) employer matching contributions. On the other hand, staying home as a caregiver may avoid substantial costs associated with daycare or health assistance, along with other expenses related to work such as commuting costs.

Women often face unique challenges when it comes to balancing the demands of time and money. Take the time to plan ahead and assess your options and the pros and cons of each.

Key goals and milestones in your life

When asked to prioritize their planning goals, the number one concern for women is to have enough income to maintain their lifestyle throughout retirement. Other top-ranked goals include not outliving their savings, maintaining independence as they grow older and being financially secure if outliving their partner.2

Keep in mind the realities of longer life expectancies and other financial challenges. You need to consider your current and projected future income, spending habits, and your near-term and long-term goals. Think about retirement holistically. Consider your interests, with whom you’ll spend your retirement, where you’d like to live and the funds needed to support your goals and milestones.

The importance of growing your assets

Investing your money and giving it an opportunity to accumulate over the time you have available before retirement is critical to your long-term financial security. Markets tend to exhibit periods of short-term volatility, an environment that can make investors nervous. Studies show that women may be more patient in the face of volatility, letting the market’s long-term upward trend work for them.1

A good first step is to determine a risk tolerance profile that aligns with your age, time horizon and comfort level. That will help guide a personalized investment plan utilizing an asset allocation strategy to help you build a diversified portfolio designed to work for you over the long term. As you close in on retirement, you may want to adjust your allocations to account for changing circumstances. Keep in mind that asset allocation does not ensure a profit or protect against a loss.

Protect your assets

One thing you can expect over the course of your life is that unexpected events will occur. This is the reason that insurance plays such an important role. Even as you close in on retirement, an unplanned event can derail your best-laid plans.

A comprehensive protection plan begins with a review of your existing coverage, something that should occur annually. This includes home, auto, health, survivor income, disability, life and long-term care. Determine if there are gaps that need to be filled. You’ll also want to regularly check on beneficiary designations to make sure they remain up-to-date.

Planning your estate

An issue that is easily overlooked is making sure you have estate documents in order. If financial security is a priority for you, having a plan for your legacy intentions, regardless of your age or wealth, is important.

Written wills and health care directives should be drafted by your attorney and kept current. If other life changes occur, such as the end of a marriage or the death of a spouse, be sure you are closely involved in any consequential financial decisions that need to be made. Turn to friends, family members and professionals for advice and support.

Get organized

Here is a checklist of key steps to take as you prepare to begin a thorough retirement planning process:

Gather key documents (financial, legal, estate documents).

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Organize professional contacts (financial, estate planning, insurance, tax attorney).

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Update beneficiary designations.

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Update your estate plan with the help of your attorney.

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Establish an emergency fund equal to three-to-six months or more of living expenses.

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Review your overall financial plan if you have one in place.

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Review your insurance coverage at least annually.

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If recently widowed, obtain multiple copies of your spouse’s death certificate and contact the Social Security Administration to clarify or determine qualification for benefits.

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We’re here to help

There are a variety of issues you, as a woman, need to consider as you determine the best approach to plan for a financially secure retirement.

Our wealth professionals from U.S. Bank and U.S. Bancorp Investments can work with you to develop a personalized plan that addresses your specific concerns and helps put you on a track to achieve your retirement goals and dreams a reality.

 

  1. Buchanan, Holly, Selling Financial Services to Women, Hatchet Publishing, 2012.

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  2. Fouche, Lori et al., “Financial Experience & Behaviors Among Women,” Prudential, 2014-2015.

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