Financial Planning for Women in Utah

Five female colleagues at a work meeting smiling to camera

Being aware of the financial and economic gaps that women face in comparison to men can help women take steps to be more prepared for their financial future.

For example, women, on average, live five years longer than men and should need a robust retirement savings to not outlive their assets. However, the average woman has one-third less money set aside for retirement and earns 23 percent less in income, making it difficult to save for retirement. 

Remember, this is the average and some of the research discussed here does not explain every woman and family. But knowing the issues and the reasons behind the issues can help every woman be better prepared for their future.

Chapter 1

Family Responsibility

Many women take more time off from work to raise children or care for parents. This can mean time off from a career, slowing their progress in advancements, raises and promotions. It can mean prioritizing flexible schedules over high-paying positions. Many women only weigh the loss of a paycheck when deciding to take time to care for family, but there are other costs, such as the loss in income to save and invest, as well as a decrease in Social Security benefits. 

Prioritizing family should not be sacrificed for money (after all, money is usually not the goal anyway, it is to provide for a family). But proper planning can be done to account for time off from formal work.

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Chapter 2

Divorce

Divorce settlements can often be inequitable because women tend to bear the larger part of raising children. This can mean deciding to take the house instead of the 401(k) in a settlement so that the children can stay in their schools and home. A home is less of a growth asset than a 401(k) and has property tax and maintenance to add to expenses. This results in many women having a less robust financial portfolio down the road. Add the fact that being the caregiver can result in lower income and less career advancement, and women can have much lower retirement savings down the road. 

Many couples are making retirement plans together. Yet 40 to 50 percent of first-time marriages end in divorce, splitting the retirement assets and hurting the finances for both spouses. Women are often hit harder. On average, a woman’s income fell by 41 percent after divorce compared to a 23 percent decline for men. Having a good financial plan during marriage can help mitigate financial fallout later on. 

Being aware of these issues can help women negotiate a strong settlement that will provide better financial stability now and in the future.

Chapter 3

Cost of Living

The lifestyle of a woman often costs more: Consider cosmetics, wardrobe and personal care. And often, women gift more to family members. In addition, women statistically end up paying more for items like cars and mortgages. And because they statistically live longer, women will usually experience high healthcare costs. 

Once again, being aware of the issues, being educated and planning ahead can help women in the long-run.

 

Chapter 4

Gender Investment Gap

Women may save more than men, according to research, but they also tend to invest less of their savings, keeping money in cash more often than investing in growth assets and making more conservative investment choices than men. An increase in a few percentage points in return over 30 years of saving can make a significant difference in a retirement portfolio. Educating women on how to safely invest in a diversified portfolio can change their long-term savings totals. Research has shown that when women invest, they outperform men. They may be more risk averse, but when that is coupled with good education, they can make wise financial decisions.

 

Chapter 5

Gender Pay Gap

The pay gap between men and women partially results from things already mentioned above, but there are plenty of other inputs as well. And there are things women can do to help themselves. 

Studies show that women often need a tap on the shoulder to go for that promotion, that elected office or that pay raise. Being aware of this and finding a support group or a mentor to point out when you should be asking for the raise or pushing your business to the next level can really help you fast-track your personal career development.

Chapter 6

Death of a Spouse

Women often outlive men. Studies show that 80 percent of men die married, while 80 percent of women die single. No matter who might live longer, it is important to have a good estate plan and make sure both spouses are properly educated and involved in the family finances. Losing a spouse is an emotional time, and proper planning can keep the finances from being an extra worry and stress.

No matter who the primary bread winner is (or if both spouses contribute to the household income), proper life insurance is key. This is not insurance for you, but it is for the people you love most to make sure they are taken care of. Do not leave those numbers up to guessing, hoping it is enough. 

For women who are primarily responsible for family caregiving, they may have taken time away from their careers. On average, women take 12 years out of their careers to care for family, and that can result in lower incomes. Having the right amount of insurance for a spouse can help them prioritize their family and not be penalized for time out of the workforce.

Women who do not work outside the home should still have life insurance. The cost to replace all that she does in the home – food preparation, childcare, cleaning, transportation, etc. – should be valued and will need to be replaced if something should happen.

Long-term-care insurance should be seriously considered, as women live longer with health problems and often outlive a spouse. They take care of their husband, but then no one is there to take care of them. 

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Chapter 7

Financial Education

Studies show that women feel more insecure about financial matters. Women may not feel like they know enough or have enough interest or time to be financially educated. Talking about money, numbers and stock market results may not always be exciting, but it is a reality of life. Having a trusted financial advisor to simplify the information and sort out what is important can make financial education much less painful. It may even become enjoyable when talked about in terms of life and goals. Real life financial planning makes better sense to some people. 

Research also shows that women are more receptive to advice because they worry more. But not all financial advice is quality advice! It is important to find a trusted financial advisor who acts as a fiduciary. A fiduciary is required to act in their client’s best interest.

In addition to looking for a fiduciary, make sure you work with a financial advisor who focuses on financial planning rather just a transactional relationship.

Transactional relationships tend to look like this: 

  1. Identify the problem, such as, “I would like to be able to retire.” 
  2. Instill some sort of fear, such as, “You could run out of money.” 
  3. Propose a product as a solution, such as an annuity. (This product often is a way for the advisor to get paid, perhaps with a large commission.)

In reality, financial planning should instead be a process that starts with questions such as:

  • What does money allow you to do in your life?
  • What would you do if money or time were not an issue?

Then, using those priorities, you and your financial advisor should begin to build a plan of action. The numbers and investment products should only be the means, not the end goal. This method of planning can be much more appealing to many people, as it speaks to their purpose instead of making finances only about budgets and performance – consider it next level financial planning. 

Remember, the earlier you start planning and investing for the future, the more successful you can be in achieving your life goals. 

At Rock House Financial, we specialize in helping women navigate the financial transitions they face in life. 

Men: Do not wait to get your wife on board. Help her be successful for whatever life might throw at her. 

Women: Recognize what behaviors or obstacles might be holding you back from making your future successful. 

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