Is Financial Planning for Women Different?

financially savvy kids

By K. Bridget Schneider, CFP®, CRPC®
financial planning for women

The observation of American Business Women’s Day on September 22nd got me thinking about how my female clients’ financial planning needs differ from those of my male clients.  How does the financial planning advice I provide change for women?  As we save for our golden years, women may have unique challenges.  Let’s look at some key reasons financial planning for women may be different.

Women Tend to Live Longer and Earn Less

It’s easy to forget that even today, many women may not earn a wage equal to men in the same position (Pew Research Center, Gender Pay Gap).  In addition, the average life expectancy for women is about five years longer than men (US Census Bureau, Living Longer: Historical and Projected Life Expectancy in the United States, 1960-2060).  However, although women may need to fund a longer retirement stage, they may have saved less for it.

Women As Caregivers

In general, women are considered nurturers.  While there have been some changes to these traditional roles in society, this tendency has made women more likely than men to take time off from a career to care for children, aging parents, or grandchildren.  Unfortunately, being a caregiver can come at a huge cost if she gives up her income stream for even a short time.  There is no salary deferral into the company retirement plan.  There is no potential to get an employer match.  And with no income, she is less likely to fund an individual retirement account (IRA).

Women’s Security with Finances

Over the years I’ve seen that women (and men) can be insecure about financial matters.  If they are very uncomfortable, they may delegate financial decisions to their spouse or another person.  Unfortunately, this is less than ideal since there is no familiarity with the investments or the plan for how funds will be used for income in retirement.  If their spouse predeceases them, they are left feeling even more insecure.

While it is difficult for someone who doesn’t know where financial accounts are held or understand the financial plan, some women soon realize they should get the help of a trusted professional.  By taking the time to find someone who hears and understands her concerns, and understands financial planning for women, they can work together to develop a plan that addresses her needs and goals.  This can help her feel much more secure and may improve the implementation of the plan and progress toward her goals. 

Women’s Insurance Needs

Even a woman who isn’t contributing income to the household still has economic value and needs life insurance.  This is especially true if she’s caring for underage children at home.  In the event of her death, life insurance proceeds can be used to pay others for things like food preparation, childcare, or transportation. 

Since women may live longer than men, and often outlive their spouses, another kind of insurance that women should consider is long-term care insurance.  This type of coverage can provide funds to help pay for assistance in your home or a nursing facility.  There are many ways to try to cover this expense and this need will grow as people continue to live longer lives.

Summary

I believe you can see how these issues really do require unique financial planning advice for women.  A woman doesn’t need to experience negative financial impact because she chose to care for her family or is insecure about financial decisions.  These issues simply make it critical for her to invest intelligently and make wise financial planning decisions from the very start.

Whether you are just now starting to realize the importance of your financial plan or need help developing one, you may find it helpful to speak with a Certified Financial Planner™ professional for additional advice about financial planning for women.  Be sure to visit our website today or call us at 217-605-8130.  At Connections Financial Advisors, our mission is to help you make more informed decisions to better your financial position and reduce your financial stress. 

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