We have had the pleasure of advising many female clients over the years — from entrepreneurs starting or running their own businesses and wives who manage their households’ finances to women experiencing the death of a spouse or going through a divorce. If there is one thing we have learned, it is that when it comes to women and investing, or more broadly, financial planning, there are many special facts and considerations that should inform decision-making and planning.
SPECIAL CONSIDERATIONS
Why differentiate women and men? While most of us probably have similar needs and concerns — for example, we all probably want to be financially independent and provide for our children and will at some point or another worry about the markets — there are several nuances that make advising and planning for women different. To fully embrace these nuances, it is important to understand some facts:
• By 2020, women will control two thirds of our nation’s wealth.
• When it comes to investing, women generally have less time to focus on it and therefore lean more on advisors for help.
• Because they tend to focus less time on investing, women typically stay on course with their plans and do not let market fluctuations take them off course.
• Generally, women trade less and have more conservative portfolios.
• According to a study done by Fidelity, women earn a similar rate of return as men but with less risk.
• On average, women earn about 75 percent of what men earn, yet they save more money.
• When it comes to planning, women live approximately five years longer than men, so they need to assume a longer retirement.
• Women tend to work more part time jobs, which typically come with fewer benefits.
• Women also change jobs and careers more frequently, which could impact benefits and vesting of retirement plan dollars.
PLANNING FOR LIFE
The above facts and figures clearly do not apply to everyone; however, knowing and understanding these facts can help when thinking about finances and future planning.
For example, if statistically speaking you will likely live longer, you must save more to plan for those extra years. Similarly, if it is likely that you will outlive a spouse, it is essential to make sure your spouse’s pension has a joint survivor option. You must also consider how your Social Security benefit will look after the death of your spouse. Currently, you have the option of taking the higher of either theirs or yours, but not both, so your income will decrease.
If you change jobs, be sure to consolidate retirement plans so everything is coordinated with your goals. If you start a new job, make sure to explore the new company’s retirement plan options and participate as soon as possible.
If you divorce, plan out the income streams and what the assets can produce for you over a long period of time, accounting for both taxes and inflation. A lump sum may seem like a large amount of money, but if it needs to last you many years, it is wise to determine how much of an income stream it will generate.
If you are widowed, the best advice is not to make any immediate decisions on anything important. Death and divorce are highly emotional, and you do not want to make an emotional financial decision that could impact you for the rest of your life. Lean on your financial advisor, CPA and attorney to help guide you through those turbulent times.
PROTECTING YOUR FUTURE
One of the things we enjoy most about advising women is that, in our experience, they are more willing to recognize the value of enlisting a professional advisor, ask for that professional’s advice and then actually put that advice into practice. Men need the same professional advising but tend to be less willing to recognize that they may need help with investing and planning. It is incredibly rewarding to see a financial plan come to fruition and support a client through a business venture, maintain a lifestyle with a solid plan for the future or provide a sense of comfort during a turbulent season of life. Each client’s life and goals are different, but as a woman, it is especially important to protect yourself and your future by recognizing the unique position you are in and planning in accordance with your goals and future plans.
WJ offers securities through Valmark Securities, Inc. (Member of FINRA/SIPC). He also offers advisory Services through Koss Olinger Consulting, LLC, an SEC Registered Investment Advisor. Valmark Securities, Inc. is separate from Koss Olinger Consulting. Koss Olinger is located at 2700-A NW 43rd Street, Gainesville, FL 32606. The material contained in the herein is for informational purposes only and is not intended to provide specific advice or recommendations for any individual nor does it take into account the particular investment objectives, financial situation or needs of individual investors. The information provided has been derived from sources believed to be reliable, but is not guaranteed as to accuracy and does not purport to be a complete analysis of the material discussed, nor does it constitute an offer or a solicitation of an offer to buy any securities, products or services mentioned. The opinions expressed do not necessarily reflect those of author and are subject to change without notice. WJ ROSSI is a partner with Koss Olinger, a Gainesville-based wealth management firm that has been helping business owners succeed for nearly 50 years. Shannon Hord is an advisor at Koss Olinger. WJ and Shannon both sit on Koss Olinger’s Investment Advisory Committee and are key in the firm’s investment management, estate planning and income distribution strategies. WJ can be reached at [email protected] and Shannon at [email protected] or (352)373-3337.