Women investors face many challenges in building wealth and in securing their financial future. Men, for many years have dominated financial affairs. With more and more women in the workplace and as heads of households they are becoming a force to be reckoned with. Women control $14 trillion in personal wealth assets. By 2020, they are expected to control $22 trillion. Women are taking more responsibility for their long term financial goals.
As a women investor you face more challenges than your male counterparts. You are more likely to outlive your husband, or be disproportionately affected by a divorce, making long term financial strategies especially critical.
In the U.S. your life expectancy as a woman is 80.7 years versus 75.7 years for a man. Losing a spouse is heart wrenching and in a family where the husband managed the fi
nances a widow may need to quickly take control of family finances. Without proper planning, this transition can add to an already stressful situation and lead to costly errors.
Families can prepare for this eventually by ensuring that both of you are involved in managing your family finances. Yet, according to a recent HSBC report, 65 percent of men make all or most of the financial decisions without input from their wives. Lack of involvement in financial affairs can put a woman in a highly vulnerable spot should something happen to their husbands.
As a woman you are disproportionately affected by divorce. Switching from a dual to a single income household brings many financial challenges. After a divorce men tend to experience only a 10 percent drop in income while women are likely to experience as much as a 27 percent decline. Many women have found that there is life after divorce, but it is critical to anticipate and plan for its potential effects on your savings and your retirement goals.
Research also shows that women are more likely to be caregivers not only to their husbands but also to elderly parents, children and other relatives. This time out of the workforce reduces the time you spend earning a living, resulting in lower lifetime earnings and less retirement savings for you than your male counterparts since statistics tell us that you will outlive your husband and be there for him as his caregiver. But who will be there to take care of you later in life?
The average cost of assisted living was more than $38,000 a year according to the annual Genworth Cost of Care Survey. Nursing home care in a private room was nearly $75,000 a year and home health aides averaged $19 per hour.
It is crucial to plan for this possibility either through savings or long term care insurance.
So what can you do to prepare for a longer life expectancy and healthcare costs?
Get involved. Go with your spouse to your accountant, attorney and investment advisor. Ask questions. Are you included in the discussion? Does that person speak only to your spouse? Or to both of you as it should be? The majority of women will change these advisors after their spouse is deceased for that very reason.
Make a list of your important papers and where they are located. Investment documents, important contacts, personal financial documents and paperwork for final arrangements should be among them. One of your professional advisors should be able to provide you with a checklist. We call ours the "Peace of Mind Checklist".
Why not make 2014 the year when you begin to take control of your financial future? Start by having a conversation with your husband or family. Begin educating yourself about wealth management, financial planning and investing. Start that checklist. Now that's a great New Years Resolution!
Michael T. Doll, an Investment Advisor with the Longboat Key Financial Group, can be reached at 941-383-2300 ext 6 or Michaeltdoll@longboatkeyfinancial.com.