Financial Planning for Women: What’s Different?

Financial Planning For Women - Differences and Strategies Explained
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Philip Weiss 

(00:00): Thank you for joining me today for today’s webinar, Financial Planning for Women; What’s different? This is the latest in my series of Ask Me Anything, webinars, I do these right now, twice a month. The next one is going to be two weeks from now on the 25th. But it’s going to be a little bit different because I’m invited to speak in front of a larger group. It’ll still be by zoom, but it’ll be through another organization. I will send out invitations to that. Once everything’s all set up.

Unique challenges women face (00:32):

So first, let’s talk about some of the unique challenges women face. Unfortunately, our societal norms often put women into disadvantage in the area of personal finances. Nationally, the median annual median annual pay for women with a full-time year-round job is $47,299 versus 57,004 56. For man, that equates to women earning 82 cents for every dollar paid to men and to annual basis. And $10,157. Women on a combined basis, lose close to a trillion dollars annually due to the wage gap. Some of the reasons for that are lower earnings as I just talked about working fewer hours. Motherhood responsibilities more often fall on the shoulders of the woman or child, think childcare responsibilities, not motherhood, because only a woman can be a mother. Sorry about that. Women tend to live longer, because the fact that they make less money if they are eligible for pension, it’s usually less. And they also lack confidence in their financial knowledge.

The impact of lost wages (01:42):

What do all these last wages mean? They mean that women and their families have less money to support themselves, save and invest for the future spend on goods and services, women, their families, businesses, and the economy all suffer as a result of us.

The impact of lower wages (02:00):

So, if the wage gap were eliminated, the average work woman in the United States won’t have enough money for approximately, there’s a whole host of different things here. But they’d have more money for childcare, more money for tuition and fees, more money for health insurance, more money for food, for mortgage and utility payments for rent for birth control to pay off student loan debt, all those things that could be used for any or all of those things.

The wage gap (2:32):

So, the wage gap exists for a few reasons. There’s discrimination and bias. Education Level doesn’t matter. And I’ll talk about in a minute, you’ll see that women at least presently are getting more education than men are, but there’s still this big wage gap. The wage gap can exist within occupations, doesn’t matter what industry it is, and choices alone cannot explain. Explain this wage gap.

Women are a major economic force (02:57):

Women are a major economic force 54% of them are the family’s primary breadwinners 61% of associate’s degrees or associate’s degrees are owned by women and 50%. So, 58% of bachelor’s degrees, women earn 58% of all master’s degrees and 53% of doctorates. And between 2014 and 2019, the number of women owned businesses increased 2.3 times the national average, women are 13 million US businesses contributing $1.9 trillion to the economy. Think about if the wage gap didn’t exist, it could be even more.

Women’s role as wage earners (03:44):

As wage earners, 29% of married women whose spouses work out on their husbands, women in North America Hold 40 to 45% of household wealth. And we think about the fact that our population is aging. Well, by 2023, women are expected to hold $85 trillion in private wealth assets and that number will only go up likely to only go up from there.

Reasons why a woman’s needs are different (04:09):

Some reasons why a women’s needs are different. 52% of women in relationship provide half or more of the household income. But only 38% are responsible for long term financial planning. At some point in their lives, many women are going to have the sole responsibility for taking care of their spine and finances. If your spouse dies, your incomes likely going to fall. And when as I said it’s more likely that that’s going to be the woman whose spouse dies and then ends. And there’s a couple of reasons that that can fall in the part of it depends upon what type of retirement benefits you have. But certainly, if you and your spouse are both getting Social Security, if your spouse passes, you’ll get the maximum of the two social security payments, but your income is still going to fall. Women associate negative workers with financial planning more than then and they also start managing money later, women are likely to have a greater need for long term care insurance. And again, that’s for two reasons one, because they live longer. And to think about it, if you’re a couple, if one person gets sick, it’s likely that the other one is going to try and take care of them. And then when there’s only one left, if you get sick, or maybe nobody else to do that anymore, so you’re going to have to insurance becomes more important. And women historically have been more reticent, or more reluctant to get their money invested. That can mean higher cash balances, and especially the environment that we’ve seen for the last several years, this last decade with low interest rates, that really hurts your purchasing power. And having all that cash contributes the likelihood that women are going to have a shortfall in their retirement. I have.

Common Financial Events (05:56):

I’m not going to go through these all. But these are a lot of the common financial events that happen in our lives. They can happen at almost any time. They include taking care of family, parents, yourself. They include your career related career related decisions. Money related decisions also often lead to disagreements among couples, the divorce rate for couples has skyrocketed over the past 25 years. Money related differences are the number one reason for divorce in many circumstances, you can see that a lot of financial events, some of these are normal and happy events, but some of them are not.

It pays to have a plan (06:33):

So, if we think about this, it really pays to have a plan. Why does it pay to have a plan? Well, it helps you be prepared for emergencies. And the unexpected, you’re going to if you have debt, gives you a plan to reduce that debt. It’s important to have a will and an estate plan. We’ll talk a little bit more about that later, too. If you can, you want to contribute the maximum you’re allowed to retirement plans. At a minimum, if your company gives you a match, you always want to take that that’s kind of like the first place your money should go to get that match because it’s additional pay when invest for the long term, not the short. And especially if you’re not sure, getting expert advice can help.

Develop a total financial strategy (07:15):

So, let’s look at Think about this, you really want to have a total financial strategy. So, you want to have a retirement income strategy now looked at things like wealth transfer or estate planning, what’s your risk management, so that’s really what’s your tolerance for risk, longevity, what that really means is how long we’re going to live because there’s two types of risks that we face as we age. One is longevity that we have never money. And the other is what’s called sequence of return. And sequence of return risks refers to the fact that we know that markets aren’t always going to go up. And when those bad market years happen, makes a big difference. You also may want to have strategies for things like charitable giving and long-term care. And while we’re working, that’s asset accumulation. You also want to have on the other side asset accumulation. So that’s really the retirement income piece.

Learn More About Financial Planning For Women

Two types of retirement expenses (08:09):

In retirement, I think two types of expenses. So, the accountant me calls them fixed and variable. But we could also call them required and desired. Required expenses are things that are predictable and consistent. That would be things like your mortgage or your rent. If you have regular prescriptions that you take a regular doctor visit that you have to make, you could consider those require transportation costs, while you can control them some, they are generally fixed, especially when you think about paying for your car or something like that food again, you have some flexibility to cut your bill. But in general, that’s a fixed cost. Insurance, which I see I have twice on the slide can be fixed costs, and utilities. And again, you can make your house a little bit warmer in the summer a little bit cooler in the winter to control that little sun, but there’s only a certain minimum threshold that you have to have to be comfortable. On the variable side things like when do you take vacation? Where do you go, how much to spend, what kind of vacation you take, what kind of gifts, you give out? What type of donations, your entertainment and the things that you’re going to do all those things? You can vary those based upon your budget and how much money you have.

Legacy planning guidance (09:19):

When we think about the future, and legacy planning, there’s a couple things we want to do. We want to know our options. So, when you’re married, you have IRAs for 401. K’s there’s rules related to those retirement accounts. What happens when they’re inherited? And when you think about that, it depends on your age that can make a difference in terms of what you do. The general rule is that you can pass an IRA from you to your spouse without being subjected to the inherited IRA rules that your kids would have to be subjected to which under current rules make you take them out in 10 years. But there’s penalties if you take money out of an IRA before you are 59 and a half. So, if your spouse dies, and you’re less than 59 and a half, you may want to treat that as inherited by, right, if you need to take some of that money out to live Social Security, you want to make smart decisions around when to claim. So, for a married couple, you want to think about the idea that the surviving spouse is going to get the higher the two benefits. So, so optimally, we wait till 70 to take Social Security, but health also factors in because the longer you wait, the more your benefit is, and your benefit grows, i.e. 8%, a year from full retirement till until age 70. And then it stops growing. So, at 70, you definitely want to take it. But if you’re a married couple, you can decide to if you can manage it, to use some of your 401 K assets, or your IRA assets to bridge the gap till you start collecting. And think about maybe one spouse collects and let the other spouse go too late 71, that’s going to have a higher benefit. Because that way, whoever is left at the end gets the higher benefit on its own, it takes till that age 82 In order for that benefit to for waiting to make sense. I know a couple who especially you have a big difference in age, it really makes sense for the first person to get the older that to wait is think about if you’ve got, let’s say the husband is 60 and the wife was 50, that’s been waits till 70, the wife is still only 60. And if she lives her life expectancy, that’s at least getting to that age 82, showing the 72 and equivalent years, if you think about it from 70 to 82. For husband, the wife is only 60 to 72. Because the benefit carries over, we’re going to be a lot of benefit to try to wait especially in those types of situations. There’s also rules that allow us to receive benefits earlier. You know, at age 6050, of disabled or any age if they’re caring for a young child. The beneficiaries are really important. You want to make sure you think about who should be the designated beneficiary on your accounts. naming a beneficiary definitely matters. If you named beneficiary on your financial accounts, it gives you the ability to pass those on to your beneficiary without going through probate, which reduces cost. Another thing that I talk about with everybody, like every client that I have that I do financial planning for is you want to make sure that you maintain a list of passwords, allowing account access, it used to be that we got statements in the mail. For the most part, we don’t anymore because you get charged extra money by the financial institutions to get them. So, if you pass your survivors aren’t may not know what all your accounts are. So, one of the things that I do for every client, every new client is I send them a book. And that book is a password book. And I recommend you put that in your username, your password and any other information related that you want to keep it in a safe place because you want to be able to access it. You can also if you don’t want to do it that way through. There’s also software like LastPass, which is the one that I use personally, where you can store your passwords in that. And then as long as somebody knows your Master Password, they have the ability to get to those accounts because accessing those accounts. If you don’t have prior right to do, it can be very difficult.

Don’t forget about healthcare (13:25):

Also, you don’t want to forget about health care. I mean, it’s first of all, you want to make sure you have advanced directives, make sure that your loved ones know what to do. It’s not that happens. making those decisions in the moment can be very difficult, very emotional. By doing it ahead of time, you can put yourself in much better position. You want to have the power of attorney for health care and financial matters. And remember that longer life expectancy can equate to higher health care spending in retirement, greater need for long term care.

How a financial plan can help (14:00):

Part of this putting together financial planning can really help how you can better understand your current situation. You can develop short term and long-term financial goals. You can have a portfolio that better matches your risk tolerance and timeframe. I often tell clients that you want to think about your willingness to assume risk as well as your ability to assume risk. It’s not need you may not need to take on as much risk as you can you think you can assume where it’s you’re willing to take on because there’s no reason to jeopardize your long-term future by taking on more risk. So, a financial plan helps marry kind of your risk tolerance with what makes the most sense based upon your assets and your savings and your spending habits. A financial plan provides a means to help you stay on track with ongoing evaluations of your financial situations. And it also helps you to be better prepared for emergencies.

Recommendations (14:56):

So, here’s some recommendations. So, I also want to People understand that not everybody on this call works with me as a client. But out of my client base, about 70% of the households that I work with, it’s either a single or divorced woman, a widow, or a widower woman, or it’s a family where the wife is taking the lead on financial matters. That’s, that’s a little more than two thirds of my client base. Recommendations take charge of your financial future. A considerable amount of data shows that women in general don’t engage with their finances often or thoroughly enough. It’s your life. It’s your finances, you should be involved. You want to make sure that you learn key financial skills such as how to budget, pay bills, manage your cash flow. You also want to know how to save, invest, and buy insurance and make sure that you’re adequately protected. survey show at least half of married women defer to their husband when it comes to long term financial decisions. Remember, they’re your finances to discussing finances with your spouse more often can reduce fighting because it puts you in sync on your biggest goals. Eight out of 10 women end up being solely responsible for their finances at some point in their life. Once a month, once a quarter, once a week, whatever works for you to sit down and discuss financial strategies with your spouse. That means things like bigger, upcoming purchases, when you plan to retire, what you’re going to do in retirement, where you’re going to live, there should be joint decisions, one person should never dictate any of those things. Also, I tell people, there’s no such thing as a dumb question. Not asking is what’s done. Because if you don’t know or understand something, the only way you’re going to find out the answer is to ask. And if you don’t know how to do these things on your own, you have two choices. You can either find someone who can help you learn or do them for you. And if you choose the latter, you want to find someone that you can work with and help you understand the why behind their choices and recommendations. So that’s something that I really make sure that I do, I want to make sure that when I make recommendations to people if they understand the why behind it. I don’t have any problem with sharing knowledge at all. I want people to understand why we do what we do and why the decisions are made. And that’s the end of this part of the presentation. I have a couple more slides, and I’ll get to my Q&A.

Growth of Apprise (17:28):

The Apprise business is growing, still always looking for new clients. And one of the ways that the business grows is through personal introductions from people we know and serve. So, as you think about who you know, that might be able to benefit from a price of services, here’s some things to look for. We like to work for people who are interested in gaining a better understanding of when they can retire, and what retirement might look like. They may be going through a life transition such as retirement, loss of spouse or parent divorce, sell a business major career change inheritance, like to work with friendly people, because of my tax background. And my belief that taxes and investing are very closely interrelated. People that are concerned about income taxes are often a good fit, people that are receptive to professional relationships, and those that are considering simplifying their financial life by delegating their affairs to professional. I think I think this way, in order to do this yourself, you have to have three things which I refer to as kit, that’s having the knowledge interest in time. Some people have the knowledge and the interest, but they don’t have the time. And what you find is, as we get older, in our career, we move up the career ladder, it gets harder and harder to find that time. If you know somebody that can give me a call, you can have them send an email to Phil Weiser enterprise wealth.com. To arrange an introduction.

Next steps (18:54):

Here’s a link to my calendar. If anybody would like to set up a meeting, you can sign up for a free portfolio review or you can sign up to just discuss your financial plan or any other questions that you might have. If you’re not on our distribution list, you can sign up for the distribution list to that link as well. portfolio reviews which I mentioned here are an important element that I use when determining the appropriate steps for each client that are included in the Financial Planning and Investment Management process. Oftentimes people are paying a lot of expenses related to their portfolio that they don’t realize. And doing that portfolio review will help you get a better understanding of your expenses as well as how your assets are allocated. And I’m going to unmute people and let it in you can ask any questions that you have or you’re welcome to send them through the chat was ever easier for you

Q&A (20:22):

Okay. Does anyone have a question for me today?

Attendee

(20:43): Phil? They have two different sessions going they could be interfering.

Philip Weiss

(20:51): That’s your right. Thank you, Richard. That’s right. If both writing one of you should get off off your volume now make the echo stop, because that’s what causes the Echo is having two computers, or two devices running zoom at the same time in close proximity to make it do that?

Attendee

(21:50): Phil? Can you hear me?

Philip Weiss

(21:56): Yes, I can hear you.

Attendee

(21:57): Okay. I wasn’t sure. So, if you leave something as a beneficiary, you leave it to one of your children. If that child has alum has debts, or people he owes people money? Can they touch an inheritance? Or do they can they automatically put a lien on it?

Philip Weiss

(22:22): I’m not 100% certain, but I don’t believe it’s a protected asset. Yeah, concerned about that.

Attendee

(22:29): Because I think that my son’s ex-wife put a lien on any inheritance he might get from me. And that’s what I didn’t know if that was possible. Or if it’s because it’s an inheritance, it’s safe from being taken by somebody else.

Philip Weiss

(22:51): I’m not 100% Sure I can, I will see if I can find out and get back to Susan, but I’m not sure my head. I feel like that’s not a protected asset. But then, part of there’s a part of the part that’s gnawing at me, as I know that, you know, inherited when a wife or a husband inherits assets, that they don’t have that those are not considered community property, unless you co join them. Like, when right but my wife, those are hers, they’re not mine.

Attendee

(23:23): Right, but he’s not married. So, this was a former wife. And he told me that she had put a lien on anything he might inherit, which would mean, should I leave, leave it to my grandchildren and bypass my child? Or just leave it to my child and hope that she doesn’t get to it?

Philip Weiss

(23:43): I understand. I’m not 100% Sure. Let me see if I can find something out and get back to you. Okay.

Attendee

(23:49): Okay. Thanks a million Phil.

Attendee

(23:55): Hey, Phil. Here. Isn’t that why people often set up a trust is to prevent other folks. You know, the money comes out slowly. And mostly. I don’t know.

Philip Weiss

(24:18): Though, again, Richard, I mean, that makes I understand what you’re saying a lot of times trust is set up just to limit the pace at which somebody can come out to so that you, you know, if you send it to your kid, you don’t want to spend it all. So, I just I’m not comfortable enough to give a definitive answer without asking somebody that knows more than me.

Attendee

(24:50): Phil, this is Jay Markley. Yes, I do. One thing I point out to the audience is that when you all become of retirement age and you’re starting to look at getting Social Security. One of the nice benefits is if you if the second person coming along wants to hold off until they’re 70. And the first one wants to start claiming right away, the second person in the line can become a spouse and collect until they’re 70, half of the Social Security they would normally be getting, and then they collect the full when they do hit 70. And that’s,

Philip Weiss

(25:29): That that only applies if you’re born in 1953. Or earlier, they got rid of that for people born after 1953. Because I still have, I have a few clients that we’ve done that, but 1953 is the cutoff anybody that when they changed for retirement age, a few years ago, they changed that rule. So, you have to be born in 1953 or earlier. It’s a great benefit.

Attendee

(25:53): Yeah, it is a great benefit. Thank you for letting me over cut off. Obviously, I’m obviously before 53.

Philip Weiss

(26:16): Does anybody else have any other questions for me today? All right, if not, I’m going to end here. And I want to thank everybody for joining me and have a great evening. Again, I’ll have my next webinar will be in two weeks. And I believe it’s going to be like at seven o’clock. And it’s an hour and a half program. But I will have more details as soon as are available. Thanks a lot, everybody. Have a great night.

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