In the spirit of women’s history month, let’s talk about the future of women. In the past few weeks, two of my colleagues blogged about financial issues affecting women today. The pay gap, advancement gap, investment gap, time out of the workforce, and extra longevity risk are some of the unique headwinds that make it harder for women to attain financial security. As we learn about challenges women face, we are all left with the question of what to do about them. If you don't identify as someone who could be facing these unique challenges, you might be wondering what any of this has to do with you or, perhaps you’re eager to learn how you can help the women in your life get ahead and take control of their future.
We all have women in our lives we care deeply about: mothers, daughters, sisters, cousins, work colleagues, and friends. Educating yourself on ways to challenge the economic biases that systematically disadvantage women is a crucial first step towards effecting positive change and creating a more equitable society. When that happens, we all win.
Since we’re all supposed to save a percentage of what we earn for our retirement, what happens if half of the population isn’t earning enough? The National Institute on Retirement Security (NIRS) ran a study where it concluded that women are far more likely than men to face financial hardship in retirement. Even in 2019? Yes, even in the age of raging feminism, grl pwr tattoos, the #MeToo movement, and Ruth Bader Ginsburg memes, we see time and time again how women are disadvantaged in long-term savings opportunities. Now the real question is, what can we do about it?
Women face unique financial challenges. Some of these challenges fall under large economic issues like disproportional earnings and investment potential, penalties for time out of the labor force, and longevity risk. Let's break it down.
She stood in the storm, and when the wind did not blow her away, she adjusted her sails.
-- Elizabeth Edwards
Even in the most thoughtfully run and financially independent of lives, there will be heart-wrenching twists and turns. Some of these life transitions are expected and planned accordingly, while others are abrupt and uncertain. It’s no secret that a significant number of marriages end in divorce, raising many emotional and financial uncertainties. However, understanding the benefits entitled to you will help build a secure framework for the next chapter of your life.
No, I don’t mean that talk- but there is another conversation that can be equally as difficult for some parents. It is hard to know when the most effective time is to talk about finances with your children. Teaching sound financial behavior starts as early as a first allowance and continues through college to when they get their first “real” job and thereafter.
Gender income and leadership inequality continue to receive a lot of attention. The good news is that changes that work to level these imbalances seem to be happening. Companies are beginning to recognize that adding women to leadership roles and management teams makes the organizations better. More women are being invited to the table, are "leaning in" and becoming a more powerful demographic. However, the pay gap is not the only financial challenge that women face. Not only do we earn less, we also live longer and tend to take more career breaks. Therefore, in terms of managing our money, we can’t be content to do as well as men, we must do better. Smart investing is crucial to financial security and independence. It also provides freedom to pursue opportunities and can prepare us for life events. Unfortunately, when it comes to investing, women are coming up short.
In retirement the loss of a regular paycheck means you may need to turn to your investments for income. As a diligent saver, you likely have accumulated assets in various types of accounts like a 401(k), Roth IRA, Rollover IRA, taxable brokerage, bank savings, HSA and an annuity, just to name a few. At retirement, you may face what can seem like an overwhelming task – determining how to withdraw tax-efficiently from your different accounts to extend the portfolio’s longevity. The impact of taxes is just as important to consider now as it was when you were saving for retirement. Unfortunately, conventional wisdom regarding which order to draw down your accounts in retirement is fundamentally flawed. When followed blindly, it could potentially deduct years from the life of your portfolio.
By now nearly everyone is aware of the security breach at Equifax that began in July of 2017. What was originally reported as having touched over 150 million Americans, now has been updated to include an additional 2.4 million affected by the breach. While this certainly doesn't mean half the country has had their identities stolen, given the scope and nature of this hack, it's just common sense to spend a few minutes to find out if your personal data may have been compromised. Here are some quick steps we think will be useful in helping you identify and protect yourself from future cyber-attacks:
If you follow financial news, you have probably noticed pundits warning of the flattening yield curve recently. In fact, they say, someday soon it will invert and part of it has already! Furthermore, when the yield curve inverts, these pundits claim, it predicts a recession almost perfectly!!! If you are like many people watching these shows, your anxiety spiked on the word "recession" and you forgot to ask what the yield curve even was. Our team is fairly level headed and analytical, and as a firm we reject market timing, so we think this kind of hyperbolic commentary should be analyzed rather than taken as simple fact.
but the short-term experience is always surprising.”
- Charles Ellis, author, Investment Policy – How to Win the Loser’s Game
How was your Thanksgiving holiday? You might answer by recalling the joy of family, the bounty of delicious food, the giggles resonating from the ‘kids table’, and maybe even the post-meal walk around the block. How wonderful! But it’s much more likely you’ll reply with details about the overcooked turkey, Uncle Murray’s (very) public argument with Aunt Millie, the short-term power outage, and the food poisoning experienced by your less-than-favorite daughter-in-law. Unfortunately, as holiday-goers, and investors, this is often exactly how we think; more likely to remember the anxiety of setbacks than the joy of progress.
The vast majority of people will do anything to make a few extra dollars, but at what cost? Many individuals are dedicating valuable time towards gig jobs that may not produce marketable skills.
A gig job is commonly defined as a flexible, temporary job that provides compensation for the completion of a set task. The individual is generally an independent contractor and common examples include babysitting, driving for Lyft or Uber, and delivering groceries over Shipt.
As with any employment decision, it is important to examine the costs and benefits associated with committing to a gig job. Unless reviewed cautiously, they can have a negative overall impact on an individual's long-term earnings potential.