Should Financial Advice be Different for Men and Women?
by Wesley Watkis
Offering financial advice for women can oftentimes be a tricky subject. After all, we’re taught to treat men and women as equals in all things related to business: education, employment, and advancement. In most cases, that’s easy enough to do; we’ve long since passed the threshold where men and women are viewed as being capable of less as or more than one another.
However, when it comes to financial advice, there are differences between the sexes that must be taken into account. It has nothing to do with intellect or financial ability. In fact, it’s all about lifestyle differences, and the fact that women continually outlive their male counterparts.
Men and Women: Different Lifestyles, Different Incomes
Although more and more women are entering job fields and making salaries that are comparable to men, the truth is that women consistently earn less than men. The reasons for this are varied: glass ceiling issues, a later start in their careers, a greater emphasis on family before work. Right or wrong, the statistics are there to prove it. Women make less than men.
Statistically, women are more likely to leave their jobs to take care of small children, to care for aging parents, and even to follow spouses who might be transferred or seeking work in another city. This translates to a reduced capacity to contribute to a 401(k) or other retirement plan. Women are often looking at 10 or 20 years of earning time (as opposed to 30 or 40 for men), and failing to rollover existing retirement plans during transition periods can result in a reduced retirement fund overall.
Men and Women: Living Harder, Living Longer
The sad truth is that divorce and death also impact the financial situations of today’s women. During a divorce, most of the settlement has to do with maintaining a lifestyle or taking care of children – rarely is there a clause for continued contribution to a shared retirement fund. This means that many women find themselves without any real retirement plan following a divorce, and they may not even have the stability of a savings account anymore. Add to that moving costs, possibly changing careers, and emotional stress, and the result is that the finances – both short-term and long-term ones – suffer.
Of course, women are more likely to live longer than men, too (90 percent of women outlive their husbands). As these women age, costs for healthcare increase rather substantially, and without any other reduction in lifestyle. This can translate into tens of thousands of dollars every year that she needs to remain comfortable long after her spouse and the ability to earn any money is long gone.
Women and Money: The Good News
Fortunately, women do have an advantage over men when it comes to finances: as a general rule, they’re better at moderate, low-risk investing. Women tend to invest after more careful consideration and with more hands-on control than men, which gives them an advantage when it comes to long-term investments like those for retirement.
Although there are certainly exceptions to every financial story, the truth is that women have to be proactive in their financial future than they may have at first believed. It doesn’t matter if you’re a young, single professional or a retired grandmother of 27 – the time to act and start financial planning for women is right now.
Questions? Email me at wesley@thewandwgroup.com and visit our website at http://www.thewandwgroup.com. New Money Talk is a weekly article focusing on retirement, personal finance, and estate planning.
Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.
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