Today’s female population is more educated and accomplished than ever before.

Women now control ⅔ of private wealth.1 That being said, when it comes to long-term, personal financial planning, women are often still giving up their seat at the table.

Many women are comfortable handling the day-to-day management of their households, but end up deferring to a partner when it comes to long-term financial planning. 70% of women over 75 are divorced, widowed, or never married.2 This increases the likelihood that women will find themselves in a situation where they need to make long-term financial decisions, which can feel overwhelming.

The good news is that women are often naturally strong planners. We plan everything from our children’s activity schedules and family vacations, to our business or personal goals. Thinking about the long-term consequences of decisions and how different puzzle pieces come together is typically an area where women excel.

That skill set is exactly what’s needed for long-term financial planning. Let’s talk about the financial puzzle pieces that women should be speaking to an advisor about.

Caregiving is good for the soul but hard on the wallet

Whether it is taking care of children or taking care of aging parents, caregiving often falls on the shoulders of women. Taking time off to care for family can have a significant impact on your finances. Leaving the workforce can mean lost promotions or pay raises, less time saving into a 401(k) and receiving an employer match, and fewer years contributing to Social Security.

The cumulative financial impact of leaving the workforce to raise children can reach upward of $500k3 and, on top of that, an additional $300k if you care for aging parents.4 The unfortunate result is that women are 2.5 times more likely to live in poverty and 5 times more likely to depend on Social Security in retirement.2

We live longer and require more care

Approximately 75% of assisted living and nursing home residents are women!2 Women are also twice as likely to become disabled at some point in their life, and their need for care will likely last three or more years.2 Because we’re living longer, we often act as caregivers and then end up needing professional care ourselves.

Living longer also creates other challenges to consider and prepare to manage. Retirement is more expensive because we have more years to cover. It also means that if you’re married, you will likely see your income reduced due to the loss of pension income and/or the lower Social Security check after the passing of your spouse.

Risk is not really our thing

Studies show that when it comes to investing, women tend to prefer less risk.5 That may seem like a good thing since taking less risk means not experiencing as many ups and downs in the market. However, considering we often have less time in the workforce to earn income and save, live longer, and require more care, investing more conservatively makes our other retirement risks more challenging. Our money needs to be managed in a way that will allow it to withstand our own longevity.

Six things you can do now:

Don’t wait!

Time is more valuable than money. Starting early to save for your financial goals can be more valuable than playing catch up in future years.

Complete a financial plan

A financial plan addresses your specific needs and goals, which is something that can be much easier to discuss. Your portfolio and asset allocation is important, but whether or not it’s going to allow you to retire, take those trips you’ve been dreaming about, or see your grandchildren regularly may put the why behind investing into perspective.

If you’re in a relationship, and your partner typically handles the meetings with your financial advisor, prioritize attending an annual financial planning meeting so you better understand your joint finances. Walking through your financial plan can help simplify some of the complexities associated with financial jargon. Be sure to ask questions about anything that doesn’t make sense. Your advisor is there to make you confident in your decisions, not to cause confusion.

Talk to your advisor about the best way to take any pension or Social Security income

Deferring Social Security can increase your benefit for the rest of your life. That can be a significant help, especially if longevity runs in your family. You should also ask about your eligibility to collect additional benefits, depending on whether you have been divorced or widowed.

Ask about what options make sense for you to cover care giving and long-term care costs

Many long-term care solutions offer additional benefits that provide resources to your family to help obtain the best care. There are some insurance policies that will even provide income to a family member providing care, to help ensure that the time spent providing care does not jeopardize their financial future.

Consider if your family should have life insurance to cover the loss of Social Security or pension income in retirement

Many people don’t think life insurance is needed in retirement. However, it can be valuable if longevity runs in your family and losing income becomes a risk you may face.

Talk to your advisor about concerns you have over market volatility and get advice

The reality is that your plan may suggest that you invest in a diversified portfolio that is a little more aggressive than your natural comfort level. Your advisor can help put market downturns into perspective. As long as your immediate income needs are covered, your investments should be managed in a way that is appropriate for your long-term goals. Unless your goals or timeframe changes, how you’re invested likely doesn’t need to.

Take the next step.

If joining multiple meetings with your advisor during the year seems daunting, select one meeting per year or one topic per meeting. If you have a partner who usually handles the meetings, be sure you are present for at least the annual financial planning meeting. Trust in your Financial Advisor knowing that they have helped many others through understanding their finances and answering all of your questions before, regardless of how simple they may seem to you.

Working with Janney

For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.

By establishing a relationship with a Janney Financial Advisor, we can build a tailored financial plan and make recommendations about solutions that are aligned with your best interest and unique needs, goals, and preferences. Contact us today to discuss how we can put a plan in place designed to help you reach your financial goals.

1 https://www.marketwatch.com/story/women-are-about-to-control-a-massive-amount-ofwealth-
but-cant-find-anyone-to-manage-it-2017-05-12
2 http://www.aaltci.org/long-term-care-insurance/learning-center/for-women.php
3 https://www.pbs.org/newshour/economy/how-much-does-it-cost-to-leave-the-workforce-to-care-for-a-child-a-lot-more-than-you-think
4 http://msue.anr.msu.edu/news/caregiving_and_its_impact_on_women
5 http://www.aaii.com/journal/article/why-gender-tolerances-toward-risk-may-differ

This is for informative purposes only and in no event should be construed as a representation by us or as an offer to sell, or solicitation of an offer to buy any securities. The factual information given herein is taken from sources that we believe to be reliable, but is not guaranteed by us as to accuracy or completeness. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors. Past performance is not indicative of future results. Employees of Janney Montgomery Scott LLC or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed within.

 

About the author

Jessica Landis

Vice President & Head of Investment Solutions

Read more from Jessica Landis

For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.

To learn about the professional background, business practices, and conduct of FINRA member firms or their financial professionals, visit FINRA’s BrokerCheck website: http://brokercheck.finra.org/