Women & Financial Security

“The biggest fear most women have is that they may become a bag lady”

Eleanor Blayney: Women’s Worth: Finding Your Financial Confidence

 As a woman, maybe you don’t worry about becoming a bag lady, but your financial security is something you should be concerned about. Women, like men, need to plan for their financial security. Both will travel similar paths toward that destination; however women need to consider several life factors that make their planning somewhat different from men.

Consider these statistics:

  • At age 65, women have an average life expectancy of 20 years, compared to 17 for men.
  • Nearly half of women over 45 are unmarried.
  • From age 65 on, women are more than twice as likely as men to be widowed, divorced, separated or never married.
  • At age 65 and older, 40% of women live alone, compared to 19% of men.

Source: AARP

Not Everybody Will Marry
Another important phenomenon affecting the need for women to be concerned about their financial security is the increasing numbers who do not marry. For them, the complete responsibility for all financial planning is all theirs. (see chart)

Women are choosing to stay single
(Percent of Women Never Married)

Source: MetLife Financial Education Workshop

Women Alone
In other words, women are likely not to have a spouse or partner during some part of their later years, or maybe they never had someone in the first place. To be 60+ years in age, and be faced with finding your own way through the maze of daunting choices, decisions, and the inevitable changes that will be necessary is not something anyone wants to experience.

Yet many women are on a path that will lead them right into that frightening situation.

Recent Study
Take for example the following responses from a recent survey done by Prudential Financial:

Many women still lack confidence in their ability to make sound financial decisions, and lack knowledge about sophisticated financial products.

  • Fewer than 2 in 10 women feel “very prepared” to make wise financial decisions. Half indicate that they “need some help,” and one-third feels that they “need a lot of help.”
  • Nearly 9 in 10 of those who are looking for a lot of help need guidance on how to choose financial products that meet their needs. They say their knowledge of annuities, mutual funds, and individual securities is limited.

Just one-third of women have a detailed financial plan in place, and, among the youngest segment (ages 25-34), just one in 10 has a financial plan in place.

  • Barriers to developing a detailed financial plan include lack of time, the pull to meet shorter-term financial obligations, lack of knowledge, and for many, an unmet desire for assistance and help.

More than half of those surveyed are very willing to have retirement planning decisions made by others.

  • This wish is often complicated by a lack of trust, as only 19% are very comfortable letting a financial professional lead their financial planning.
  • Over 6 in 10 rely on family and friends, rather than financial professionals, for investment information.”

Source: 2010-2011 Prudential Research Study

Positive Directions
Now, all is not negative. The same Prudential Research Study revealed these positive directions:

  • “Women are more involved than ever in their households’ investment and financial decision-making. The economic crisis has heightened women’s recognition of the need to develop a financial plan that will meet long-term financial goals.
  • Women are not confident about making financial decisions, and do not fully understand many of the increasingly sophisticated financial products that are available.
  • However, women are optimistic about the future and have a strong desire for financial education and guidance.”

And perhaps the most positive result from the Prudential Research Study:

“Despite the financial setbacks of the economic crisis and concern about continued volatility, more than half remain optimistic about the country’s economic recovery.”

 

Important Points to Takeaway
The sources referenced here, and countless others on the internet make these important points:

  1. Women need to be more concerned about their own financial security, whether they are married or not.
  2. Probably due to cultural factors, among others, women have not displayed the same interest in financial matters as men (generally speaking) and may have trepidation about the subject.

Helpful Guidance
The Tri-Town Teachers Credit Union does not in any way play the role of financial advisor, nor does it offer specific financial advice. It does, however, believe it can play a part in helping its members and their families recognize that planning for financial security is very important and help them focus on the critical questions, choices and decisions that need to be considered. And it can do that without offering specific advice on investment or other financial decisions.

To that end then, this is the first of a series of Tri-Town Apple posts that will deal with the need for women to take a greater role in their own financial security.

We hope our readers will take at least two actions.

One, sign up to be notified by email of future Tri-Town Apple posts.
Two, tell us what you think about this and if you have any particular topics you like us to cover. Comments are greatly welcome!

But please remember we are not financial advisers and cannot offer specific advice, neither to individuals nor in general.

We hope to hear from you!

We don’t want anyone to be afraid of becoming a bag lady!

About the 403(b) and Why It Is Important

Financial planning for retirement is important! To do this well, individuals need a good understanding of the resources available and how those resources may benefit them. For public school teachers, one of the most important considerations in this regard is participation in a 403(b) plan. 403(b)wise is a web site that individuals can use to learn about 403(b) plans. We have taken a portion of the  material on that web site to provide some basics, but we urge readers to visit the site themselves and/or use other resources to gain a solid understanding of the 403(b) plan. In no way should this post be taken as financial advice.

The 403(b) is a retirement plan available to certain employees of public schools, employees of certain tax-exempt organizations, and certain ministers. The 403(b) is named after the section of the IRS code governing it.

The 403(b) can be an excellent way to save money for retirement. It can serve as a supplement to a traditional pension plan or other retirement plan(s), or as a stand-alone plan.

Eligibility
All public school employees and not-for-profit workers are eligible to participate in a 403(b). However, employers can restrict access based on such factors as hours worked. Check with your employer for details.

Tax-Sheltered Annuities (TSA)
The 403(b) is also known as a tax-sheltered annuity, but this is an outdated expression. It can give the impression that participants can only invest in annuity products, which was the case when section 403(b) was first added to the IRS code. However, since 1974, participants have also been able to invest in mutual funds through a 403(b)(7) custodial account. Throughout this site “the 403(b)” will refer to a 403(b) plan allowing investment in both annuity products and mutual funds.

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