| Investment Management and Financial Planning |
Planning for Women
When it boils down to fundamentals, planning
for women is not much different than planning
for men. After all we share common goals:
wealth maximization, risk minimization and cost
containment. Both ought to strive for an optimal
investment mix and both should start investing
for retirement at an early age to take advantage
of compounding. So, with regard to investing,
there is no difference between genders and
there is no special need that women have.
Yet, unlike men, women face many unique
issues that most men don’t.
Women's life histories and the way they interact
with employer-sponsored benefit plans, individual
savings and insurance plans, Social Security,
and other social safety net programs often create
financial shortfalls. High divorce rates and the high probability of widowhood
also have a substantial impact on the financial circumstances of women.
Some of the challenges women face:
Some startling statistics about women and
money:
from their own pensions than men (21% of women vs. 42% of men) '
and their pension benefits are less than half of men’s’ on average.
for an equal job.
Facing the Challenges
Because of the unique set of challenges that women encounter, planning is
more important than ever. From the individual’s perspective, the steps are fairly
obvious:
When it boils down to fundamentals, planning
for women is not much different than planning
for men. After all we share common goals:
wealth maximization, risk minimization and cost
containment. Both ought to strive for an optimal
investment mix and both should start investing
for retirement at an early age to take advantage
of compounding. So, with regard to investing,
there is no difference between genders and
there is no special need that women have.
Yet, unlike men, women face many unique
issues that most men don’t.
Women's life histories and the way they interact
with employer-sponsored benefit plans, individual
savings and insurance plans, Social Security,
and other social safety net programs often create
financial shortfalls. High divorce rates and the high probability of widowhood
also have a substantial impact on the financial circumstances of women.
Some of the challenges women face:
- Longer life spans
- Shorter and interrupted working careers
- Earnings disparity
- Retirement systems that penalize women for temporary absence
- Financial literacy
Some startling statistics about women and
money:
- Women rely on Social Security for a larger part of their income in
from their own pensions than men (21% of women vs. 42% of men) '
and their pension benefits are less than half of men’s’ on average.
- Nearly 20% of unmarried women 65 and older live below the poverty
line.
- Women need more retirement income but they usually have less
for an equal job.
- Estimates suggest there are around 23 million unpaid care providers
(for children or elderly parents) in the U.S. Seven in ten are women.
Facing the Challenges
Because of the unique set of challenges that women encounter, planning is
more important than ever. From the individual’s perspective, the steps are fairly
obvious:
- Get involved in the household finances and get informed
- Stay out of debt
- Take advantage of employer sponsored plans
- Don’t have a corporate retirement plan—start your own individual
- Explore the use of spousal IRA’s when you are out of the workforce
- Establish your long term goals (future income needs, time horizon, etc)
- Determine a target asset amount
- Save lavishly for yourself
- Identify an appropriate investment policy
- Invest soundly and monitor progress on regular basis
- Update your portfolio as your life changes or as you approach retirement
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