Women face different issues than men in the world of financial planning
Whether you are single, married, widowed, or divorced, you will face unique challenges during your life time that will require specific financial planning.
Katherine Rubin, founder of Wahlberg Financial Services, shares her thoughts on some of these challenges, on the way women are regarded by the financial services industry, and on being a female financial advisor.
Statistically, women outlive men in the U.S. by almost 5 years, which translates to almost 5 extra years of retirement. To cover that additional demand on their money, women will need to save more and/or for a longer period of time than their male contemporaries. They also need to make sure they are saving correctly.
Unfortunately, many women do not feel prepared to make the correct saving and investing decisions. In a 2013 Wells Fargo survey of affluent women, including primary wage-earners of the household, 91% considered knowing how to properly invest money to be important, but only 8% considered themselves to be ‘extremely confident’ investors. 49% considered themselves ‘somewhat confident,’ and 41% were ‘not at all confident’ in their investing abilities. This lack of confidence may contribute to the fact that only 58% of the women polled for the study considered themselves to be savers, even though they had the means to do so.
The wage gap equals the saving gap:
A 2012 study on IRAs by the Employee Benefit Research Institute revealed large discrepancies in both the average balances of and the annual contributions to the IRAs of men vs. women. The study found that women had an average of $81,700 in their IRAs, compared to the $139,467 average of men. Women contributed just as often, but in smaller amounts than men – $3,995 vs. $4,023 that year.
The same holds true for employer retirement plans. A 2014 study by Vanguard of 401(k) accounts under their custody showed that while the average male balance was around $121,201 at the end of 2013, the average female balance at that time was around $78,007.
Conversely, female 401(k) participants were found to save at a higher rate than male: not only were they more likely to participate in the company 401(k) (70% contributing vs 63%), butthey saved a higher percentage of their income.
Why, then, are women’s account balances so much smaller? The primary reason is likely the wage gap. In 2012, women earned roughly $.77 for every $1 earned by men, and Vanguard’s study showed that, in 2013, the average wage of male 401(k) plan participants was $107,000, while female participants averaged salaries of $78,000. This lower pay leads to lower contributions to employer-sponsored retirement accounts, as well as lower employer matches in these accounts.
The wage gap also gives women less savable money over-all and lower accumulated Social Security benefits, making their need for financial planning that much greater.
Caring for others but not themselves:
Women, whether married or single, are also the traditional care-givers for their families, whether for children, siblings, or aging parents. Providing this care often takes a woman out of the work-force for a time. The Women’s Institute for a Secure Retirement reports that women typically spend 13 years out of the workforce to care for family, impacting both their savings and their projected pension and Social Security benefits. A woman’s financial planning should consider this possibility and incorporate it into her saving and investing strategies.
Women should also be paying close attention to their potential need for long-term care assistance. Due to their longevity, women are less likely than men to have a spouse care-giver available. According to the Council on Contemporary Families, 43% of men, but only 6% of women, age 90 and older are still married. Further, women are more likely to live alone in general: 37% of American women age 65 and older live alone, which is almost twice the percentage of men living alone at that age. That percentage increases to 47% for women at age 75. This means that women will need to budget for potential long-term care costs and possibly investigate their Long Term Care Insurance options.
Sending a Woman to do a “Man’s” Job
A 2014 survey of American women ages 25-70 by Ameriprise Financial revealed that 41% of women polled, whether single, married, or in relationships, are making financial decisions alone. Further, of the respondents who were in a relationship, 40% consider themselves to be the sole financial decision maker of their household and 56% believe they make joint financial decisions, leaving only 4% of these households with men as the sole financial decision makers.
Despite this, the world of “finance” continues to be viewed as an area for men and not women, and financial news and advice continue to focus on men in both content and tone. “Investing” has become an unappealing topic for many people, riddled with condescending assumptions about women and their financial prowess or interest.
The truth is not that women are bad with money or disinterested in financial matters. They just approach finances differently than men do. “The reality is that women gather information about money differently and process it differently than men do, not that we’re less intelligent.” 
Due to these differences, among other reasons, a female advisor may be in a better position to help women with their financial planning. Check out “Ladies: 5 Reasons to Choose a Female Financial Advisor” for more discussion on this topic.
Once I overcame my initial intimidation of “investing,” I quickly realized that a woman can make a truly great financial advisor. My experiences with different clients and my studies for the licenses and designations I hold have proven this to me many times over. I now embrace the unique perspective I have and try to bring that to the work I do for all of my clients.
I believe that if a woman is more interested in discussing her long-term goals, her cash reserve, and her protection strategies than she is the next hot stock or her portfolio returns, it doesn’t mean she doesn’t understand or care about money. It simply means her focus may be different. It’s my job to work with clients, both female and male, toward their own, individual goals, not to tell them their priorities are wrong.
At Wahlberg Financial Services, we believe you should work with someone who understands your priorities and discusses financial matters the same way you do.
Contact us today to arrange a complimentary consultation.
 Mortality in the United States, 2012. Centers for Disease Control and Prevention: Xu, Kochanek, Murphy, and Arias.
 Wells Fargo Study: As Women Achieve Affluence, Does Investing Confidence Follow? September 19, 2013.
 « Individual Retirement Account Balances, Contributions, and Rollovers, 2012; With Longitudinal Results 2010-2012: the EBRI IRA Database,” Copeland, Craig, Ph.D. EBRI Issue Brief no. 399, May 2014.
 “How America Saves 2014”, Vanguard Institutional Investors.
 “What Women Need to Know About Retirement”, The Women’s Insitute for a Secure Retirement, edited by Jeffery R. Lewis and Cindy Hounsell, foreward by Teresa Heinz Kerry. Page 3.
 “Aging Alone in America”; Elena Portacolone, Ph.D., Eric Klinenberg, Ph.D., and Stacy Torres, for the Council on Contemporary Familes, May 1, 2013.
 “Women and Financial PowerSM study”. June 2014. Ameriprise Financial, Inc. and Artemis Strategy Group. Survey was conducted March 6-24, 2014. The resulting study used responses from 3,515 Americans ages 25 to 70 with at least $25,000 of investable assets.
 Nicole Sherrod, managing director of active trading at TD Ameritrade, quoted in an interview for the February 2014 NY Times article “Mars, Venus, and the Handling of Money”. (http://www.nytimes.com/2014/02/23/business/mars-venus-and-the-handling-of-money.html?_r=0)