Financial Planning For Women

When it comes to financial planning and investing, some advice is applicable without regard to gender: start early, contribute to your 401(k) or IRA, control your expenditures, and make investing a habit. However, there may be critical differences between men and women that should be considered when making financial decisions.

For example, life expectancies, compensation levels, and investing styles can be different for men and women. As a result, planning often must be tailored specifically for women. But men also need to pay attention to these issues, because they are likely to affect their mothers, wives, sisters, and daughters. 

Factors to consider

*Lifespan. The first thing to consider is that women live an average of six years longer than men. Consequently, women need to accumulate more money for retirement than the average male. Consider this: The average woman retiring today at age 65 could easily live another 25 years. Without proper planning, a woman could outlive her savings.

*Earnings. Women also tend to earn less than men. Beyond having less cash available for investments, earning less also often results in thinner pensions, smaller social security payouts, and fewer benefits.

*Time Out. Another employment-related issue is that women may take some years off from their jobs to raise a family. Those years out of the workforce can result in decreased pension contributions, decreased pension benefits due to fewer years of service, and the obvious decrease in earnings and savings. In addition to the cost in hard dollars, being out of the workforce often means lost seniority and promotions. These, too, may affect retirement benefits.

*Investments. Investment style is also a consideration. Women tend to invest more conservatively than men. While relative safety may be prudent for some investors, for many younger women, an extremely conservative portfolio may fail to keep up with inflation, let alone accumulate a healthy nest egg.

It is vital that women realize their financial planning needs may be different from those of the men in their lives. For a review of the planning strategies most suited to your situation, give us a call today.

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© Copyright 2001 Raymond S. Kulzick. All rights reserved. 010205.