Why Women’s Financial Needs Are Different from Men’s
Women have very different financial needs than men for a variety of reasons, and all of them underscore our need to set up a solid savings routine sooner rather than later and plan better for retirement.
First, women live about seven years longer on average than men. This means we have to finance a longer life, which makes financial and retirement planning crucial.
Another reason why women’s money needs are different is that women earn 25% less than men, so they have to live longer on less money. And since women are still the primary caretakers for children, more women than men take time off to raise kids as well as care for aging parents, which results in lower total earnings, reduced Social Security benefits and less savings.
When you couple this with the fact that women tend to be less investment-prone than men and much more risk-averse in their investment choices, you have a formula for a serious financial shortfall. Fortunately, women are becoming more financial savvy these days and are embracing ways to take control of their finances and their futures.
According to David Bach, author of Smart Women Finish Rich, women need to let go of three critical money-related myths:
All three of these beliefs are illusions, says Bach, and are powerful arguments for why women need to spend less than they earn and plan for the future, whether you’re financially secure right now or not, married or live alone.
Whether you’re single or pool your money with a significant other, it’s important to take stock of your household finances and assess what your total income is, what you own, what you owe and where your financial records are kept. If you’re invested in a pension plan, make sure you understand how it works. Read up on Social Security benefits at Social Security Online and look into how they’re affected by a divorce or remarriage, if this applies to you.
Far too often, women buy into the mentality that finance is a “man’s thing” and we don’t need to be bothered with details, but it’s critical to educate yourself.
Many Web sites offer retirement calculators to help you devise a savings plan. Sites such as MsMoney.com and WIFE.org (Women’s Institute for Financial Education) provide helpful information in an easy-to-understand way. Remember: You don’t have to be a financial wizard to learn the basics of money management.
And when you consider how women’s lifestyles plummet after a divorce or death of a spouse, you’ll be scared straight. Consider these startling facts:
- 1 in 4 women will be penniless within two months of their spouse’s death.
- Over 75% of women are widowed at an average age of 56.
- Women account for 87% of the poverty-stricken elderly.
These sobering statistics underscore the need for some basic financial planning—and the sooner, the better.
Figure Out a Game Plan
Once you’ve studied up a bit, set up some financial goals and figure out a plan for achieving them. For example, think about when you want to retire and how much you’ll need to support your lifestyle.
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