Women & Finance | Part 1

Taking the Lead: Facing the Financial Realities Unique to Women

As the gap between men and women continues to narrow in many areas of leadership, it is important to address the financial realities that women face today. These realities cause women to be less prosperous than their male counterparts, therefore making smart financial stewardship an essential part of any female leader’s arsenal.

The statistics are staggering. Women live longer, earn less and will likely be solely responsible for their own financial decisions at some point in their lives. Women need to be prepared to make confident and financially healthy decisions to get the most out of their resources.


THE HEART OF THE MATTER

Women Have a Dual Challenge:  Women Earn Less and Live Longer

Statistics vary with job level, but on average women earn 76 cents for every $1 men earn. They are starting with 25% less, resulting in an average lifetime earnings deficit of $300,000.1Women, on average, have a six year longer life expectancy than men.2Couple this longer life expectancy with lesser earnings and the challenge is compounded.
People are also retiring at an earlier age than ever before, currently averaging sixty-two years old at retirement, versus the traditional retirement age of sixty- five.3 This means those resources must support a woman for an even longer period of time, if she chooses to retire early.

 Women Are More Likely to Have Interrupted Work Histories

Women are more likely to work part-time, or work fewer years in pension-covered employment because of interruptions in their careers to take care of family members or due to relocations to support a spouse.4This pattern of work further reduces both their income and their savings.

 Women Are Less Likely to Have Retirement Benefits and Less Likely to Take Advantage of Them

Fewer women than men have jobs that include a pension or 401(k) plan (30% of women versus 48% of men).5Participating in retirement savings is the first big step towards improving financial security. Yet, only 41% of women participate in their employer’s 401(k) or other retirement plans.6

 Investment Knowledge and Confidence

Women indicate they have far less confidence about how to make investment decisions, opting for “safe” options that provide a lower rate of investment return, likely leaving them with a retirement shortfall. 83% of women would like employers to provide advice on how to manage retirement savings (versus 76% of men).7Of the women in this survey, single women were most in favor of the support, with 89% favoring employer policies that do more to encourage retirement planning.8

 You Will Be Solely Responsible for Your Finances at Some Point in Your Life

Currently, 26 million women head households. And, by the time they reach 65, 41% of all women in the United States live alone.9At some point in their lives, 90% of women live alone. At these times, each woman must make all of the financial decisions that support her current situation and protect her in the long run.

Women Face a Higher Risk of Poverty

Women are 70% more likely to spend their retirement in poverty than men.10It is a sad and shocking result of all the factors listed above.


FROM REACTION TO REALITY

What Does This Information Mean for Me?

Clearly, the combination of lower earnings and less participation in retirement plans is making women more vulnerable in their long-term financial planning than they should be. Women need the knowledge to start planning for their economic well-being earlier and over a longer period of time than ever before. The choices women are facing aren’t just about saving for retirement. They need to be able to make deliberate financial decisions with confidence that will allow for a fulfilling and prosperous future, whether they are 25 or 65, married or single and regardless of their level of financial resources.

Building a Framework to Lead in Making Smart Financial Decisions

The first step in meeting the challenges of the women’s unique financial realities is to learn to build a framework for managing your money and to begin taking responsibility for your future.  Stay tuned. In this series, I will provide you with just that– a framework to get you started making better decisions and building a better, more stable life.

Women leaders have an obligation to set an example of how we manage our finances at work and at home.

In this series, you will learn why the following strategies are important:

  • How saving and investing your money strengthens your confidence and your leadership presence.
  • Asset Allocation: Savvy investors know this is the crucial investment decision.
  • Importance of Diversification: Strong leaders know better than to put all their eggs in one basket.
  • Women leaders have the confidence to stay the course in investments as well as strategic plans.
  • Effective leaders know when and how to delegate: Finding a financial advisor.

 

Hewins Financial Advisors, LLC d/b/a Wipfli Hewins Investment Advisors, LLC (“Hewins”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940. Hewins is a proud affiliate of Wipfli LLP. Information pertaining to Hewins’ advisory operations, services and fees is set forth in Hewins’ current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at www.adviserinfo.sec.gov. The views expressed by the author are the author’s alone and do not necessarily represent the views of Hewins or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Hewins, and Hewins does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Hewins of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional. Hewins does not provide tax, accounting or legal services.
Janice Deringer
Janice Deringer

Financial Advisor

Janice L. Deringer is a financial advisor and consultant who focuses on serving individual and corporate clients in Portland, OR. She brings 20 years of institutional investment management experience to her strong interest in educating women and individuals regarding financial decisions, realities and possibilities.

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Women & Finance | Part 1

time to read: 4 min