Women and Their Wealth
A comprehensive guide to understanding how the unique life stages of women impact their financial wellbeing
From the CEO
“Isn’t wealth management the same for women as it is for men?”
This is a question I hear often. At first glance, it might seem to be the same. Afterall, proven investment strategies work the same whatever your gender. Investment management, however, does not exist in a vacuum. Assets should be managed to meet the unique circumstances of the individual.
Holistic wealth management for individuals is built around your unique life circumstances, goals, and needs for the future and in that regard, women face unique hurdles. When it comes to investing and building wealth we often have to approach those hurdles strategically to overcome them. If women and their professional advisors aren’t aware of these unique financial needs and challenges, it’s going to be even harder to overcome them.
Better Money Decisions is a woman-owned, woman-focused Registered Investment Advisor Firm. As a fee-only, independent firm, we’ve built our practice around helping women plan for their unique financial challenges. We don’t take a cookie-cutter approach.
Whether you’re a single woman by choice, happily married, a new mom, taking care of aging parents, a recent divorcee, a recent widow, some combination of those, your experiences have an enormous impact on how you manage your finances.
Each of these experiences should be considered in your holistic wealth management plan.
With our advisors’ average experience of 20+ years serving women investors, we can help you manage your finances throughout all stages of your wonderfully feminine life.
– Lorraine Ell, CEO
Women and Their Wealth: 5 Pressing Trends
If there’s any question about why women deserve special attention in the financial services industry, we need only look at what research can tell us. The average woman has a 26% larger retirement savings shortfall than the average man. A 65-year-old woman’s retirement fund is, on average, $268,404 short of the savings they need to comfortably retire.
That statistic alone shows that women are in need of tailored wealth management and financial planning services.
The following five trends are all challenges many women will face in their lifetimes. Of course, every woman and her circumstances are different. But statistically, these challenges are overwhelmingly more likely to affect women than men. Planning for these challenges – and strategizing appropriate solutions – is critical for women to achieve financial success.
1. Women Inherit More
When we say women face unique challenges, it’s important to note that not all these challenges are bad in and of themselves, like inheriting more money. Some of these “challenges” can be good for women financially, even if they’re not easy to handle emotionally. Of course, without proper planning, challenges like inheriting wealth can certainly take a turn for the worse.
According to a 2009 study by the Boston College’s Center on Wealth and Philanthropy, women will inherit 70% of transferred wealth over the next two generations. This is excellent news for women and their financial futures, but inheritance can come with complexities.
A large influx of money into your life is almost always accompanied by strong emotions. And because we often make emotional decisions with our money, women who aren’t adequately prepared to manage these emotions can quickly lose the money they’ve inherited.
This phenomenon makes it essential that women have a plan for what to do with their inheritances, keeping in mind their future needs and goals, their expected and unexpected emotional responses, the tax implications, and the various threats to their inherited wealth.
2. Women Spend More Time Caretaking
It’s just a fact; on average, women spend more time than men caretaking for both children and aging parents. Emotional and physical effects aside, caretaking burdens also significantly impact women’s financial futures and outcomes.
Caregiving can place stress on a woman’s finances and prevent her from taking the necessary steps to plan for her own secure future. Often, women feel that putting others before themselves is the right thing to do. This means that she may sacrifice her retirement savings to care for her children’s needs (i.e., education, housing in young adulthood) or her aging parents’ needs (i.e., healthcare, assisted care facilities).
Women are also more likely to drop out of the labor force to care for children or aging parents. Dropping out of the workforce, even temporarily, can significantly impact her lifetime earnings and career prospects. By the time she’s ready to retire, she may have earned $1,000,000 less than someone who was able to remain in the workforce over their entire career.
3. Women are Still Closing the Wage Gap
Here’s the good news: Women have made considerable strides in closing the wage gap over the last several decades. Since 1980, the wage gap has decreased from $0.64 on the dollar to $0.84 on the dollar, which has held steady for the past 15 years. And almost half of women today are the primary breadwinners in their households – a nearly 400% increase since 1960.
Yet the wage gap persists, and understanding the reasons for the wage disparity between men and women is complex. Until recently, the wage gap could be explained by systemic differences like educational attainment, occupational segregation, and years of work experience.
Now, women are more likely to graduate from college than men and have increased their presence in higher-paying career paths. So why does the wage gap endure?
Research shows that women continue to be overrepresented in low-paying jobs such as childcare, education, and retail. Additionally, a woman’s caretaking burdens may prevent her from working consecutively throughout her career tenure or from giving 100% of her energy to her occupation. These obstacles mean she is less likely to be considered for promotion or raises.
However, there is good news for young women. In 2020, women aged 25 to 34 earned 93 cents on the dollar compared to men in the same age group. Additionally, more than 15% of women in the United States have personal incomes of $100,000 or more and research shows that women will control more than two-thirds of the nation’s wealth by 2030.
Even as the wage gap closes, women and their financial advisors must still consider the systemic disadvantage that compounds women’s ability to save enough for retirement.
4. Women Live Longer
Women’s longer life expectancy increases the need for more savings for retirement. According to data from the Organization for Economic Cooperation and Development (OECD), American women who turned 65 in 2019 have a life expectancy of 86.8. American men who turned 65 have a life expectancy of 83.2.
Longer life expectancy means that women must save more to sustain those extra years in retirement, even though caretaking responsibilities and the persistence of the wage gap make it more difficult for them to save. Additionally, living longer can mean higher healthcare and medical costs, especially considering the increased need for assisted care.
This critical planning factor differentiates women’s wealth management needs from men’s. Combined with the burden of caretaking responsibilities and the persistence of the wage gap, it’s no wonder that women have a retirement savings shortfall. Proper planning can help overcome this shortfall.
5. Widowhood Often Creates Sudden Poverty
Women must be prepared to sustain themselves financially in old age on their own. They are often (voluntarily or involuntarily) left out of financial planning conversations and should work to educate themselves about investing and managing finances.
Since women have a longer life expectancy, the death of a spouse often comes with a reduction in income. When younger, it usually means the loss of a second income. When older, Social Security benefits are reduced to one payment although it’s the higher of the two. The reduction in income is significant especially considering that with one spouse gone, living expenses are not cut in half. Pensions may also be discontinued or reduced and new income tax filing status changes may increase taxes. Often savings are depleted in caregiving expenses leaving the surviving spouse with fewer retirement assets.
Unfortunately, many predatory “advisors” prey on vulnerable women to earn commissions from financial products that widows don’t need. Women must have a trustworthy financial partner to plan for this period of life with long-term financial strategies in place to protect them if they experience widowhood.
Women’s Questions About Their Wealth
By now, it may be clear that women face unique challenges when it comes to earning, saving, investing, and managing their wealth. In an ideal world, all women would have the confidence to acknowledge and explore these challenges with a trusted financial professional.
Yet confidence is one of the most challenging barriers for women to handle their financial lives with certainty. Many women are afraid to ask questions for fear of appearing vulnerable or sounding foolish. This is why it’s so important that women work with a financial professional they trust.
If you have questions about your finances you’re afraid to ask, you are not alone. Scores of women have the same questions that you do. And – I want you to believe me here – your questions are important. Below are some of the most common questions our female clients ask about their finances. Perhaps you’ve wanted to ask similar questions.
- What kind of financial protection do I need as a single woman?
- How do I get started on a sound investment plan?
- Will I have enough money to retire?
- I’m engaged! What financial issues do I need to discuss with my future spouse?
- We’re having a baby! How do I prepare for this major life transition?
- Can I afford to be a stay-at-home mom?
- My parents are getting older. How can I prepare for their financial needs?
- How can I maximize my retirement savings?
- How can I educate my children about financial responsibility?
- My spouse and I are separating. Where and how do I Iearn to manage my finances?
- My spouse passed away. How do I start getting back to normal?
At Better Money Decisions, we believe in empowering women to ask whatever questions they have. So many aspects of your life touch your finances in significant ways. Even if your question doesn’t feel like a financial one, we encourage you to ask it anyway. More often than not, the answers to your questions do have an impact on your finances.
The next section of this guide illustrates how different stages in a woman’s life can considerably impact the financial planning she needs and deserves. You will learn about:
- Financial Advice for Single Women
- Financial Advice for Engaged and Married Women
- Financial Advice for New Moms
- Financial Advice for Women Caring for Aging Parents
- Financial Advice for Women Experiencing Divorce
- Financial Advice for Women Experiencing Widowhood
Keep in mind the advice provided in these sections is based on general and statistical trends. The advice may not apply to your unique experiences and circumstances. The only way to ensure you receive the correct advice is to share your individual needs, goals, and situation with a trusted financial partner.
Although every section in this guide will not apply to your specific circumstance, they may be useful to someone you care about such as a granddaughter, daughter, niece, or mother. Please share what you learn and remember we are here to help you achieve financial wellbeing.
Financial Advice for Single Women
Single women may be more likely than married women to take active control of their finances, but not always. Despite women’s strides in educational attainment and corporate presence, women everywhere still struggle to build the confidence they need to make the right financial decisions. Often a lack of confidence stems from a lack of knowledge. Unfortunately, personal finance isn’t something that’s routinely taught in schools.
Luckily, information is abundant and a lack of education is easily remedied. From books to podcasts to online blogs and informational webinars, women have access to more financial and educational resources than ever before.
So if you’re feeling unsure or uncomfortable about your finances, find an educational resource you like and start learning. Identify two or three financial topics you’d like to know more about and begin your education there.
It’s also important to work with a financial professional who doesn’t make you feel foolish for asking questions – any questions! Your financial professional should be providing you with the education and knowledge you need to be confident about your finances.
Top Financial Advice for Single Women
1. Protect Yourself with an Emergency Fund
It’s impossible to predict the future, so an emergency fund to use in case of an unexpected job loss, a medical emergency, or a market crash, is essential. Individuals should have three to six months’ worth of expenses in an emergency fund.
As a single woman without someone else’s income to rely on, you may want to save even more. Additionally, more and more single women work in higher-paying career fields, so they tend to own more assets. A financial emergency can significantly hinder a woman’s ability to fulfill her financial obligations.
Your circumstances will inform the size of your emergency fund. Typically, an amount equal to 6 months of living expenses is recommended. Consider job security, average monthly expenses, general health outlook, financial obligations, and future plans when building an appropriately sized emergency fund.
2. Get Comfortable with Investing
You can’t save your way to wealth, so you have to invest. And because women have longer life expectancies than men, as well as systemic financial challenges, they often have to save and invest more strategically to have enough for a secure future.
When it comes to investing, prioritize your retirement savings first. You want to ensure you have enough money invested for your retirement (which may last several decades) so that you don’t have to work your entire life.
If you have access to an employer-sponsored retirement plan, make sure you’re investing at least enough to take advantage of any matches offered.. From there, experts recommend investing at least 15% of your income in a retirement account, although you may want to invest more depending on your future needs and goals.
If you have additional discretionary income after monthly retirement savings goals, consider investing in taxable investment accounts or alternative assets (such as real estate) to continue building wealth. The earlier you start investing, the more your future will benefit from the power of compound interest.
3. Yes, You Need a Will
Many single women, especially single women without children, mistakenly assume that estate planning is more important for married couples. But in reality, estate planning is just as important for single women, if not more so.
If you were to become incapacitated, an estate plan will ensure that someone you trust will continue paying your bills, making investment decisions on your behalf, and making medical decisions according to your wishes. Getting your affairs in order protects you from unpleasant circumstances if something should happen where you can no longer make these decisions alone.
An estate plan should include adding beneficiaries to all accounts, creating a will, and designating financial and healthcare decision-making roles to trusted family members or friends. Working with a holistic wealth manager and an estate planning attorney is the best way to accomplish this need.
Financial Advice for Engaged and Married Women
Engaged and married women must grapple with important questions and decisions about their finances as they enter this stage of life. To merge finances with your partner or not to merge? If merging finances, how best to do so in a fair way that doesn’t cause tension? What if you haven’t yet had a conversation about finances with your partner?
Engagement and marriage are exciting times in a woman’s life. But as finances are among the top reasons for divorce, financial conversations are critical for new couples who want to set themselves up for success. There will be many financial issues that couples will have to face together, including but not limited to:
- Saving for shared goals
- Saving for separate goals
- Paying off shared debts
- Paying off individual debts
- Purchasing a home together
- Having children
- Relocating for a new job
- Caring for aging parents
- Saving for retirement
Having an open line of communication is key to a successful marriage, especially when it comes to money. Although one partner tends to assume the responsibility for managing a couple’s finances, both parties need to be involved and at the very least, understand and agree with the way money is handled in the relationship
Top Financial Advice for Engaged or Married Women
1. Talk About Money Openly and Often
First, make sure you and your partner are on the same page about finances before getting married. (If you’re already married, that’s okay! Start the conversation now.) It’s vital to discuss financial goals, mindsets, habits, and, yes, even financial difficulties each of you may have faced before.
As part of this conversation, you should both disclose if you have assets or debts and how you will handle those. Will debt payments become a joint responsibility, or will they remain separate? Will assets be shared equally, or will some remain individual? If one person brings significant assets into the relationship, a prenuptial agreement is imperative. It prevents the loss of assets if the relationship does not last and ensures that money is not a factor in the relationship’s foundation.
No matter what you decide, honest and open conversations are crucial to avoiding financial pitfalls or surprises in the future. Couples who are most successful with shared finances talk about money often. They discuss spending and expenses without blame or shame, set and work toward financial goals together, and are on the same page about their financial standing. Enlist the help of a neutral third party such as a fiduciary advisor to help guide these conversations.
2. Choose a Method to Handle Shared Finances
How you share finances as a couple is entirely up to your preferences. It is not necessary to combine everything for a successful marriage. In fact, a whole combination approach doesn’t work for many couples.
While sharing finances can (not always!) make things easier in terms of bill-paying and budgeting, sharing finances can also result in more stress for couples who have different financial mindsets and habits. Couples who don’t want to combine all their finances might choose one of the following approaches:
- Combine most of your money in a joint account, but with separate accounts for discretionary spending
- Keep most of your money in individual accounts, but with one joint account for shared expenses
- Keep your finances entirely separate
Additionally, if one partner makes significantly more money than the other, couples may want to consider a fairer way to split shared bills and expenses than the 50/50 method. Some couples adopt a percentage approach in which each spouse contributes to shared expenses based proportionately on their respective incomes.
3. Prepare Estate Planning Documents
Estate planning is essential for couples to engage in as soon as they’re married, although the planning necessities may be minimal for new couples depending on their existing assets. If one partner were to pass away or become incapacitated, it’s important that the other partner can access and manage all financial accounts.
Additionally, estate planning documents should specify who will take care of financial and health decisions if something were to happen to both of you, especially if you have children. It’s important to review estate planning documents, including beneficiary designations, wills, insurance policies, retirement accounts, and all other financial accounts, at least annually, in case anything in your circumstances has changed.
Financial Advice for New Moms
“We’re having a baby! Now what?”
When new moms first find out they’re pregnant, the last thing they want to think about is the financial implications of their pregnancy. Welcoming a child into the world is an amazing experience, but it also reveals new financial questions that mothers and their partners must be prepared to answer. It is estimated that the cost of raising a child to adulthood now is over $300,000!
First, review your health insurance plan to make sure you understand your maternity benefits or out-of-pocket costs. The Affordable Care Act mandates that all health insurance plans cover maternity care, but you may still be subject to a high deductible and out-of-pocket maximum depending on the type of plan you have.
It’s also crucial to review your company’s family leave policy and check how much time you will have with your new baby before returning to work. Many new moms wish to transition to a stay-at-home lifestyle. Allowing one parent to stay at home may be achievable for many families, but this decision should be considered carefully.
At Better Money Decisions, we love helping women achieve this transition. We also know that few other life stages add as much immediate stress to a family’s financial situation. Even if you’re prepared to give up your paycheck, you should still engage in routine financial tasks such as budgeting, making debt payments, and saving money for emergencies, future expenses, and retirement.
Additionally, women who want to transition to full-time caregiving must consider the career implications of this decision. Women who leave the workforce, even temporarily, may earn $1,000,000 less than someone who remained in the workforce over their entire career. That’s not to say that women can’t be stay-at-home moms, but to emphasize the critical importance of financial planning for this exciting stage of life.
Top Financial Advice for New Moms
1. Update Your Estate Plan and Beneficiary
Now that you have a little one, it’s important that all your financial affairs are organized to protect them if something should happen to you, your partner, or both. If you have an existing estate plan, make sure you update your will and other directives to include guardianship designations. Failing to do so may mean that the state will decide how to place guardianship.
Additionally, you may want to purchase or increase your life insurance policies for both you and your partner. Even if you plan to stay at home, your contributions to the household and caregiving responsibilities are invaluable to the family unit. If something were to happen to you, your partner would almost certainly benefit from financial help to cover the contributions you were providing.
Finally, ensure you’re updating your estate planning documents at least annually, especially as your child gets older. Depending on how your circumstances change, you’ll want to review and, if necessary, update your beneficiary designations on all your accounts annually.
2. Don’t Make Any Major Financial Decisions Right Away
Becoming a parent is massively emotional. Some of those emotions are positive (think excitement, overwhelming love, and joy), while others aren’t so positive (hello hormones!). New moms may experience anxiety, postpartum depression, intense fear, and of course, exhaustion. All of these emotions, both positive and negative, can prevent you from acting rationally.
Because emotions are high, it’s important to hold off on making major financial decisions without thoroughly weighing the pros and cons. Although you may be eager to upgrade your home, quit your job, or blow your savings on a stylish nursery remodel, slow down.
If this is your first child, focus on keeping a little extra cash in your budget or padding up your emergency fund. It’s almost guaranteed that your new little one is going to throw some unexpected costs your way. Also, increase your life insurance to cover the cost of raising the child to age 18 in the event something happens to you. Term life is relatively inexpensive and will protect the child’s wellbeing should you no longer be there to cover that responsibility.
If you’re considering making a significant financial decision, talk it over with a trusted financial professional. They can help you examine the advantages and disadvantages of the decision you’re considering from an objective standpoint and with your best interest – and the little one’s best interest – in mind.
3. Adjust Your Budget
Babies can be expensive, and you’ll need to adjust your monthly budget to account for diapers, clothing, toys, baby food, and more. You may also need to start planning for childcare costs if you and your partner plan to continue working. Planning for college is another factor to consider and many new parents opt to start a college savings plan such as a state 529 plan and make monthly contributions.
Because little ones can cost so much, you’ll probably need to increase your emergency fund. Not only will your expenses be higher, but you’re also adding one more person who may experience an emergency in your household. A sufficient emergency fund will provide the peace of mind that you’re protected when the unexpected inevitably happens.
Financial Advice for Women Caring for Aging Parents
Women caring for aging parents (emotionally, physically, financially – you name it) may feel like they’re caught between a rock and a hard place. Caring for aging parents means balancing your parents’ needs with your own needs. And if you have children, well, then you’re balancing their needs in the mix as well. An estimated 66% of caregivers are female and although men also provide assistance, female caregivers may spend as much as 50% more time providing care than male caregivers.
Many women caring for aging parents fall somewhere between feeling happy and honored to provide care or feeling obligated and resentful. Wherever you are on that spectrum, it’s important to approach this stage of life with respect for your own needs, openness, and an objective understanding of the benefits and costs associated with caring for aging parents.
Additionally, you know from the above that caregiving responsibilities fall disproportionately on the shoulders of women. So even if your own parents don’t need substantial help caring for themselves, you may find that you’re expected to care for your partner’s parents – whether you want to or not!
Unfortunately, studies have found that women who care for aging parents are twice as likely to live in poverty than women who aren’t caregivers. While this statistic doesn’t mean that caring for your parents (or parents-in-law) will ruin you financially, it does highlight the importance of planning for this type of caregiving and making sure it aligns with your overall financial plan.
Top Financial Advice for Women Caring for Aging Parents
1. Have a Conversation (or Several!) with Your Parents
Although it may feel inappropriate or nosy, you must have an understanding of your parents’ financial situation when you begin providing care for them. You need a clear picture of their security and their ability to pay for medical costs and any necessary care intervention or facilities they may need in the future.
If their financial situation is less than adequate, you may feel like you have to contribute financially to help cover the gaps. If you feel good about doing so and have the means, this may not be a problem. But sacrificing your retirement contributions or other savings abilities can have enormous financial impacts on your future.Medicaid and Medicare offer services to older adults. Military veterans may qualify for additional benefits for caregiving. Be sure to explore all of these options before supporting your parents financially.
To begin this conversation, start by asking your parents questions from a place of compassion. Ask them to remember how they provided for you financially when you were growing up. Take care to phrase the questions as coming from a place of wanting to know what’s important to them and how you can best help them get the care they deserve.
2. Know Your Boundaries
It’s also vital to know your boundaries. Be clear with yourself – and your partner if you’re married – about what you’re willing to do and what you’re not willing to do. Although setting boundaries can feel difficult, especially when your parents are vulnerable, your own emotional, physical, and financial wellbeing should also be top priorities.
If you’re simply unable to provide the emotional, physical, or financial help you would like – or indeed, that your parents need – there are resources available to help you. The National Council on Aging may be able to help you and your parents meet their needs by connecting you to nonprofit organizations, government resources, or businesses that can provide affordable care assistance.
3. Review Their Estate Plan
Finally, work with your parents to ensure their affairs are in order. Once you’ve begun the initial conversation, work with them to organize their financial and estate planning documents. Organized documents help everyone to understand the complete picture of their financial situation. Additionally, you may be able to help them spot oversights or gaps in their estate plan.
If they don’t already have a durable power of attorney to whom they’ll designate financial and healthcare responsibilities, they need one. Whether they name you their power of attorney or someone else, they can rest assured that their affairs will be managed according to their wishes if something happens to them.
Working with financial professionals and estate planning attorneys may help make this stage easier on both you and your parents. Financial professionals and attorneys can provide objective guidance, which may be more comfortable for your parents to hear rather than receiving guidance from their adult children. Hiring these professionals will also provide you with much-needed peace of mind.
Financial Advice for Women Experiencing Divorce
Divorce is a painful and emotionally exhausting time. Between emotional turmoil, the possibility of legal battles, and worrying about the effects on children, women experiencing divorce often have little time to deal with the financial implications.
Yet the financial implications of divorce can be devastating.Unfortunately, women have to act quickly and early to protect themselves financially and preserve their financial rights. The United States Government Accountability Office found that women’s household income fell by an average of 41% when they divorced. Men’s household income dropped by about half that amount.
This discrepancy can be attributed to a variety of factors, some of which we’ve discussed in this guide:
- The persistence of the wage gap
- Women’s greater caregiving burdens
- Women’s desire to keep the peace during divorce settlements
- The assets women typically get to keep post-divorce (i.e., the family home, which doesn’t provide income)
Divorce can feel overwhelming and unmanageable. A holistic wealth manager who advocates on your behalf can help lessen the burden on you to protect yourself financially. Many attorneys do not have a thorough understanding of your finances or even the best way to divide assets. Protecting your finances is an asset not only to you, but to your children. Working with a fiduciary financial advisor who will help you understand your finances will give you the confidence to make the right financial decisions in this next chapter of your life.
Top Financial Advice for Women Experiencing Divorce
1. Get Organized
Organizing your financial records is crucial for you and any financial professionals or attorneys you’ll work with throughout the divorce process. Even if you’re divorcing amicably, finances can cause even the friendliest of exes to get nasty, so make sure you store all your financial information in a secure place that only you can access.
You may also want to open a new individual bank account for yourself at a new financial institution that doesn’t hold any joint accounts for you and your ex-spouse.
Additionally, gather copies of your credit reports. Now that you’ll be on your own, it’s essential to monitor and maintain your credit so you can get approved for mortgages or other loans. If you and your ex share debt, ensure debt payments are being made. Monitoring both credit reports will prevent your ex from accruing additional debt without your knowledge. If it’s a joint account, you’ll be on the hook for paying off the debt.
Once assets are divided, make sure they are all legally retitled and separated. Loose ends are expensive to litigate and shockingly, 75% of the time divorce decrees are not fully executed. Read the decree in detail. It’s your responsibility to make sure the paperwork is completed and assets distributed correctly.
2. Create a Budget for Yourself
If you expect your household income to drop, which most divorcing women do, you also need to create a budget for your new lifestyle. The budget should include the cost of legal fees you may accrue throughout the divorce process, and keep in mind that divorce proceedings can take much longer and cost more than initially anticipated.
Once you’ve created a budget for your monthly living expenses and anticipated divorce costs, figure out how you’re going to save money. You may want to start an individual emergency fund to protect yourself in case of job loss or if the divorce proceedings don’t go according to plan.
3. Change Your Beneficiaries and Update Your Financial Plan
This includes the need to create a new will separate from the one you held with your spouse. You may also need to change your healthcare directives and beneficiary designations if you don’t want your ex to inherit your assets or be in control of your medical decisions should something happen to you.
Additionally, you may want to review your investment allocations for the assets you will be keeping after your divorce. If your retirement savings are less than what you’d originally hoped for or thought you had, you may need to adjust your risk exposure one way or the other to account for lost time or protect what you already have.
Financial Advice for Widows
Eleven million women in the US are widows, and the median age a married woman becomes widowed is 59.4. Widows over age 65 may expect to outlive their spouse by 15 years or more. No matter how old you are when you lose your spouse, becoming a widow can be a devastating transition. And as you’re grappling with grief, managing your finances might feel like the last thing you want to do.
Well-meaning friends or family may advise you not to think about finances or make any major financial decisions for up to a year after losing your spouse. Unfortunately, this advice is often misguided and could end up having devastating consequences. Some financial tasks simply can’t be put off when you’re forced to transition to life on your own.
Taking care of your finances is especially important for widows who don’t feel confident or comfortable with their finances. This is why it’s critical to find a trustworthy and fiduciary financial partner who is willing to educate you, reassure you, and ensure that you understand your investments and financial plan for the future.
True, you probably don’t want to make any major financial decisions you don’t absolutely have to for at least a year. Because your emotions will be running high for a while, you may not want to buy or sell investments you don’t have familiarity with or make a decision to sell your home.
Instead, focus on taking care of the essentials, such as making sure you know how to provide income for yourself and make any debt payments on time.
Top Financial Advice for Women Experiencing Widowhood
1. Get Organized
This first step can often feel the most overwhelming, especially if you don’t know where to look for your financial documents or even what financial assets and liabilities might exist. Some of the most important documents you’ll want to search for include:
- Your will
- Trust documents
- Life insurance policies
- Birth certificates
- Marriage certificate
- Death certificate (order several from the funeral home to claim benefits from various sources)
- Your spouse’s Social Security card
- Bank account statements
- Investment account statements
- Retirement/pension plan statements
- Your spouse’s credit reports
- Credit card statements
- Mortgage statements
Having your documents organized will make it easier to work smoothly with professionals such as a financial advisor, estate planning attorney, and banking representatives. Organized records will also make it easier to access benefits such as spousal Social Security and life insurance benefits if applicable.
2. Protect Yourself First
Unfortunately, people know that widows may be in a state of vulnerability. Both scammers and unethical salespeople prey on widows to sell them investments or financial products that are not in their best interest.
As a new widow, one of the best things you can do to protect yourself is to simply be aware that predators are out there. If someone unfamiliar ever tries to sell you a financial product you don’t understand or ask you for money, talk to trusted loved ones or, better yet, a trusted fee-only financial partner who can provide objective advice.
Additionally, family members – well-meaning or not – may approach you as an open pocketbook if they believe you’ve received a large inheritance. Don’t give into financial pressure from loved ones, no matter how large your inheritance or how emotionally convincing they may be. Your own financial security is of the utmost importance.
3. Find a Financial Partner You Trust
Widowhood is an incredibly difficult time for any woman. Finding a financial partner you trust, who can educate you and advocate on your behalf, is essential for helping you maintain financial security. Unlike family and friends who may not be familiar with every aspect of your financial situation, a holistic wealth manager can provide objective guidance.
Here’s a secret: You do not have to stay with the financial advisor your spouse used; in fact, if your spouse’s financial advisor didn’t make an effort to include you in financial conversations, or if you just don’t feel like you click with that advisor, it’s perfectly acceptable to find a new one. Approximately 70% of widows start a relationship with a new advisor after losing their spouse.
Womanhood is a Major Component of Holistic Wealth Management for Women
Women in all stages of life have unique experiences that add value to their financial planning strengths and considerations. Financial advisors and wealth management professionals can’t adequately serve women’s financial needs without regard for this uniqueness.
Confidence, unfortunately, is one of the most significant barriers a woman faces when she starts taking control of her finances. The best way to build your confidence, of course, is with education. You can educate yourself with the myriad of published and online resources available, and you can carefully vet financial professionals to ensure you work with a holistic wealth management team you trust.
Getting the financial pieces in order is essential so women can live the life they dream of – whether that life includes a single life full of adventures, busy motherhood, times of grief and transition, or all of the above. Financial peace of mind provides women with the confidence they need to live the life they want.
Live Your Best Financial Life
Better Money Decisions Can Help You Live the Life of Your Dreams
Better Money Decisions is a woman-owned, woman-led wealth management firm that focuses on serving women’s needs exclusively. We provide comprehensive financial services that are based on the goals that are important to you and the strategies that are available to you.
We meet you where you are: financially, emotionally and socially. Our goal is to provide you with the support you need to succeed in all aspects of your financial lives from managing investments, to planning for retirement to guiding you through a period of transition.
We promise to regularly review the elements of your plan and investments, as well as to always handle your requests in a timely fashion. No matter your question or concern, we are here for you.
Better Money Decisions Can Help You Thrive Financially
We are here to help review your entire financial life, and your finances are just the starting point. Our expert advisors are happy to speak with you to understand your financial concerns and learn how we can help.
Comprehensive Investment Management
Investing with Better Money Decisions begins with you, not the market! Once the Financial Wellness for Life planning process is complete, we’ll recommend a portfolio designed exclusively for you, based on your needs and goals.
Better Money Decisions’ investment committee is headed by Lorraine Ell and Lea Ann Knight CFP®, national experts and authors of investment and planning columns whose work has appeared in Forbes, Kiplinger’s, and US News & World Report.
Your investments are managed by a team of experts with decades of experience managing money for clients throughout the country. We prioritize education and ongoing guidance on every financial question you have. Everything from buying or selling real estate, to spending money for your next vacation.
Lastly, we provide regular check-ins about your financial goals. Are you on track? Has anything changed in your life? Life is fluid and full of changes and surprises. Your plan needs to be adaptable as well.
Investment advisory services offered through Better Money Decisions, LLC, an investment advisor registered through the SEC.
Copyright © 2023 Better Money Decisions. Financial Wellness for Life® is a registered trademark of Better Financial Decisions, LLC. All rights reserved.