When we look at the reasons that women older than 55 need to have a different wealth management strategy than men do, we can trace those differences back to one statistic that stands above the others: The average woman lives 3–5 years longer than the average man. Because of this, 75% of married women will become widows in their lifetimes — numbers straight from the Social Security Administration.
A wealth management plan that accounts for retirement has to take this into consideration. A plan that would work for a man might leave a woman short for the last half-decade of her life or more.
The average widow loses their spouse at age 59. I have seen this happen with many clients; it is never happy, and I know many readers understand this reality all too well. Another reality is that, when that happens, the widow will still live another 22 years on average (to meet the average lifespan of an American woman, age 81). Did the couple’s financial and retirement plan come up with a contingency for this situation?
I’m talking about all of this because I cannot overstress how important it is for women to be thinking about these things — and not just thinking, but planning as well. And talking — with spouses, with family, and especially with a financial advisor who can help manage wealth in a way that covers all the bases, no matter what
Unfortunately, many women are not receiving the services that they need in this regard. Women typically retire with half as much in their various retirement accounts as their male counterparts. Why is this the case? We don’t have to guess at one big cause: Women spend more years of their life caregiving instead of building wealth at a career, and as a result, they have to work 11 years extra on average than men to make up for that lost income.
All of this is compounded at the moment by the fact that the job losses since the pandemic hit have disproportionately affected industries where women outnumber men — in businesses such as leisure, hospitality, education, and some areas of health care.
Here is the reality: Every single woman needs a written financial plan. Whether they are divorced, married, widowed, or single, they all need a plan. That plan needs to cover contingencies such as widowhood and time away from work or earning other income to take on a caregiver role for a spouse or other family member. And it also needs to help balance investments. Men tend to put more money into riskier investments, which makes more money in a good economy. Women are more conservative on average, which can either really help or hurt them in the long run. But there’s a balance to be had, and a woman’s financial plan needs to keep
that in mind.
Once this plan is written, it has to be followed. Just as importantly, it has to be reviewed at least every year — ideally more often. For example, at my office, we are always on the lookout for the ways our clients’ plans and wealth may be impacted by the day-to-day events and the ups and downs of the market and our world.
This month I want to help as many women as possible get on an equitable track. I can do that at my firm, but you don’t have to work with us. Just make sure your plan does the things listed above — they are the bare minimum. And make sure your financial advisor is aware of the very different realities facing women who are trying to make financial plans.
We have videos and articles online specifically addressing this topic and women’s financial planning needs because we have many clients in this situation. Their plans are secure, and their futures are brighter as a result — and that is something every woman deserves.