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Financial Empowerment for Women in retirement

With the Right Tools and Strategies, Women Enjoy Financial Independence

Women today have more freedoms and advantages than ever before, and it’s all thanks to determined, vocal, active women who paved the way.  A hundred years ago, in August of 1920, the 19th Amendment to the Constitution guaranteed women the right to vote, and since then, they’ve entered the workforce and taken control of their bodies, finances, and futures.

Today, women choose to be stay-at-home moms, forge a career path, or both.  They choose their own mates, raise children with partners or on their own, and decide the course of their own lives in ways that weren’t possible even a century ago.

Despite the fact that women have come a long way, there are still improvements to be made.  Females still face a significant wage gap, although it is narrowing as women learn to recognize and demand their value.  As of 2018, women earned roughly $0.82 for every dollar a man earned.  There’s even an Equal Pay Day on March 31, meant to mark the point at which a woman earns what a man does in a year, supposing both of them started on January first of the previous year.

Achieving financial independence has been an uphill battle, but women continue to make strides, and they seem to be approaching a tipping point when it comes to empowerment.  This concept was the basis of a recent study conducted by wealth management firm Merrill Lynch, in partnership with Age Wave, a thought leader in the field of population aging.

The study, entitled “Women & Financial Wellness: Beyond the Bottom Line”, explores not only where women are today, in terms of financial independence, but how we got here and what comes next.  Here are a few important takeaways and insights for women looking to achieve financial independence, and the empowerment that comes with it.

Women by the Numbers

Women often get lumped into a group, but there are a number of factors working against women when it comes to achieving financial independence, and gender is only one.  Life span, education, goals and values, and certainly the wage gap all play a role.

Let’s just start with the fact that women typically live longer than men.  According to the World Health Organization (WHO), women in 35 countries have an average life expectancy of over 80 years, roughly 6-8 years longer than men globally.  While the WHO notes that women tend to suffer lower mortality rates at all ages, for a number of reasons, they also point out that the additional years women outlive men don’t necessarily infer a good standard of living, as health can become a significant issue.

Add to this the fact that over a lifetime, the gender pay gap can have a dramatic impact on wealth accumulation.  Making $0.18 less per dollar than a man may not sound so bad, until you start to add it up.  If a man earns $100,000 in a year, a woman earns $82,000.  That $18,000 less each year is significant enough, but when you consider the compound interest it could earn in a retirement account, or how it could be invested, you start to appreciate what it actually means.

For starters, women’s longevity, paired with the wage gap, could mean that women have to remain in the workforce longer.  Women typically spend 44% of their lives working, compared to men giving up 28% of their lives to employment.  Then there’s the fact that women tend to fall into caregiver roles, taking breaks from work to raise children and care for parents, elderly relatives, or even spouses, further impacting their earnings and setting them back.

On the bright side, there have been incredible gains for women in recent years.  It has become commonplace, even expected for women to attend college with their male peers.  In fact, women now culminate at higher rates than men seeking bachelor’s degrees.

According to the National Center for Education Statistics, 62% of first-time, full-time female students earned an undergraduate degree at public institutions, as opposed to only 57% of male students (with 69% of females versus 63% of males earning a degree at private nonprofit institutions).  This drive for higher education has helped women to demand higher salaries over the years.  Between 1970 and 2015, women’s earnings grew by 75%, while men’s grew by just 5% during the same time period.

Women’s Financial Goals and Priorities

Says Jeanette Schneider, Senior VP and Private Client Advisor at U.S. Trust, “Women make more value-based decisions for themselves and their families, rather than just going for the bottom line.  When you bring values into the conversation, it makes all the difference.”

Generally speaking, women tend to intertwine financial goals with personal goals, values, and priorities.  In fact, 77% of women equate the value of money to what it can do for their families, and 65% want to invest in causes that matter to them.

Unfortunately, women don’t tend to feel as capable as their male counterparts when it comes to investing, with just 52% of women saying they feel confident managing investments, while far more feel comfortable paying bills (90%) and budgeting (84%).  Investing is a major part of achieving and maintaining financial freedom, though, and 41% of women say their greatest financial regret is not investing more.

Since financial education is lacking (even though 87% of women agree that basic financial management courses should be mandatory in high school) and women have few female role models where sound fiscal strategy is concerned, it seems that most women will have to take the reins.  Women already pass on all kinds of knowledge to their children, from early instruction in reading and mathematics, to life skills like household management, to wisdom regarding interpersonal relationships and emotional maturity.

As more women take control of their finances and become educated about investment and wealth management, these capabilities can be passed along to new generations of women seeking financial independence.  It begins with committing to financial education, in order to become confident enough to invest.  By investing in themselves, women create opportunities for empowerment, improving not only their own lives, but the outlook for future generations of women.

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