Mary Quist-Newins, MBA, MSFS, CFP®, ChFC®, CLU®
Women have come a long way in the past century. Just a little over 100 years ago, American women were not able to vote, were not able to access financing for businesses or property. In many states, were prohibited from owning property, going to college, and earning income. Now we see women build thriving businesses, lead cities, states, and nations, and raise powerful voices for equality. But there is a striking paradox about women and money: American women are more educated and affluent than ever, yet are also at increased risk of poverty when compared to men.
How can women build and protect their wealth, while understanding the opportunities, challenges, and implications this paradox brings?
The Opportunities
It seems that not a day goes by without the announcement of another major study on women-owned wealth and earning power. Representing more than half of the U.S. population, American women are better educated, paid more, and live longer than ever before. As a result, they have become one of the world’s most powerful economic forces, not only in terms of what they spend but also in terms of their increasing wealth.
These trends are expected to continue as American females have earned more bachelor’s and master’s degrees than men for nearly three decades. Advances in education, combined with higher labor force participation, have led to increased earning and asset accumulation power. These factors, along with generational and spousal wealth transfer, are leading some to estimate that by 2030, roughly two-thirds of the nation’s wealth will be in the hands of women.
The Challenges
While women today control about half the country’s privately held assets, nearly three in four Americans living in poverty are female. Why is there such a disparity? Compared to men, women face significantly more financial risks. These include lower lifetime earnings, greater longevity, higher probability of singlehood, increased likelihood of chronic and disabling health conditions, as well as lower financial literacy.
Women are also more likely to experience the “double jeopardy of long-term care.” That is, women represent both the overwhelming majority of those giving informal home care (about 75%), as well as those receiving facility care (approximately 70%). Both caregiving and care receiving can present devastating financial, emotional, and physical consequences without good advance planning. Each of these risk factors can represent a formidable challenge in their own right, but when combined with other risks, the sad result can be impoverishment. The U.S. Department of Labor gives us a glimpse of the alarming trend facing older females.
Many financial advisors are unaware of these challenges, or if they are aware, fail to bring them up. It’s not fun to write, teach or talk with clients about them, but they are important to recognize, acknowledge and plan for. Without good planning, and far too often, women unintentionally assume financial risk. Risk mitigation begins with awareness.
The Future is Bright
When financial risks are adequately addressed, the economic future for women is bright and full of possibilities! A sound and well-thought-out plan help women mitigate risk and set them up for success, not just in wealth, but in the big picture of life.
Good financial and risk management begins with awareness, education, and tools. Visit the “Resources” section of our website for informational articles, glossaries, presentations, and calculators: https://www.moneyweave.org/financial-calculators.
