Congratulations, as of this year, women officially control the majority of privately-owned financial assets in this country. Not only is that wealth an awesome responsibility, but it also presents women, especially Baby Boomers aged 45 and over, with an enormous opportunity. Here’s how you can prepare.
Knowing how to handle your finances has become a necessity for all women. The older you are, the more important an understanding of your assets has become. In my last column “Women baby Boomers are at a Crossroads” I laid out my case for why acquiring this financial education was absolutely necessary. But becoming educated and prepared doesn’t have to be difficult. If you apply yourself and at the same time utilize financial professionals that specialize in working with women investors, the process can actually be fun.
In the meantime, get involved in managing your family’s finances. You may already be doing some of that. I don’t mean just paying the bills and keeping the checkbook balanced (although that is important too). I had asked you to get your financial records together. Now I want you to begin the process of understanding what is going on with your family’s investments, estate plans, insurance policies, deferred savings plans and taxes. Know where all your money is and the location of all important financial documents. Understand both your employee benefits and your husband’s benefits, review all bank and investment statements each month and start keeping organized records.
“But that’s my husband’s job,” protested one woman who recently became a client.
“Not anymore,” I explained,” it is a shared responsibility and both parties need to understand it thoroughly. If your husband won’t explain it, I will.”
It turned out that the spouse was actually happy and enthusiastic in his response. He later confided to me that he has often worried about what would happen if he passed away prematurely and his wife was left sorting out his finances. He had a right to be worried since over 75% of women are widowed at an average age of 56 and 1 in 4 of these women are broke within two months of being widowed, according to the National Center for Women and Retirement Research.
As I’ve written in the past, women often do not have their own retirement savings. Mothers who stay home and take care of the kids rarely set aside money for their own savings, depending instead on their husband’s account. Women also go in and out of the work force far more frequently then men and feel that contributing to their company’s retirement plans is simply a waste of money or worse, they use it to rescue their families from financial emergencies or even as a vacation fund. That’s a mistake. I firmly believe that women need to start their own retirement accounts. And speaking of married woman and their future, plan your financial life as if you will be on your own someday. Statistics indicate that is likely to happen since women outlive men by an average of seven years.
As I’ve already mentioned, start managing your finances together, have separate credit cards in your name and make sure that your name appears on all investment accounts accumulated during your marriage. Also think about getting term life insurance coverage that will replace at least 60% of joint earnings.
If you follow the steps I have outlined above, you will soon have a handle on where you are now. Knowing what you have or don’t have in financial assets is an important first step in this educational experience. From there, you can begin to formulate your financial goals.
Knowing what you want will help you get to where you want to be on the road to financial empowerment. Whether it’s learning to make wise investments, saving for retirement, your children’s education or an entirely new career, it starts with a financial goal and a plan to get there. In my next column in this empowerment series, I’ll discuss investment strategies for women designed to achieve your goals. In the meantime, you’ve got a lot to do.