4 financial considerations for women


For women, several considerations can have a big impact on your financial life — longer lifespans, greater time spent out of the workforce, the persistent gender pay gap, and growing wealth are just a few. These realities have been further illuminated throughout the pandemic, as roles at home and work are influx.

Here are four realities unique to women, and steps to help you take control of your financial future:

 

1. Women live longer than men

Women live an average of five years longer than men, according to the Centers for Disease Control and Prevention.1 With more time in retirement, your money will need to last longer to cover living and healthcare expenses.

How you can prepare: Consider balancing growth-oriented investments with guaranteed and more stable income sources in retirement. Your financial advisor will help you develop a strategy that considers the expenses associated with a longer lifespan. Growth-oriented investments often include stocks, while guaranteed and stable income sources include:

  • Social Security benefits, which are available to you beginning at age 62, unless you meet certain requirements
  • Pensions
  • Annuities in payout
  • Certificates of deposit through a bank, which earn a fixed interest rate

 

2. The gender pay gap still exists

Despite advancements, the gender pay remains a reality. Women who work full-time earn an average of 81.6 cents to every dollar that full-time, working men earn.2 This adds up over a working lifetime — the discrepancy can cost American women between $700,000 to $2 million.2 As such, you may need to regularly save a greater percentage of your income than the average man.

How you can take control: Prioritize your financial goals as early as possible. Your financial advisor can work with you to consider how to accommodate for a potential wage disparity and provide investment advice that may help your savings grow more over the long-term. In the chart below, the difference between the person who begins investing at age 35 versus the one who starts at age 55 is $335,178, even though the 55-year-old saves more per year, on average.

Graph representing investing over time

Source: Investment Returns Calculator, calculated for time horizon and annual contribution amount. The example is hypothetical and assumes a 6% annual rate of return. The figures do not reflect taxes, investment or product fees or expenses which would reduce the figures shown here or imply any guaranteed rate of return. Past performance is not a guarantee of future results.

 

3. Women may spend more time out of the workforce

Women often juggle multiple responsibilities and are more likely to face career interruptions due to childcare, caring for aging parents or providing other family assistance. This has become more apparent during the pandemic — women ages 25-44 have been three times more likely than men to not be working during this time due to childcare demands.2 Time away from the workforce — pandemic-related or not — can impact financial and career progress.

How you can navigate this: Take time to review your finances with your financial advisor, who can help you make adjustments to stay aligned with your goals and priorities.

 

4. Women’s wealth is growing

Women’s wealth in the U.S. and around the world is increasing. With that, so is their impact on the economy. In fact, women now control a third of U.S. household financial assets — more than $10 trillion.3 By 2030, they’re projected to control a majority of the $30 trillion in financial assets that baby boomers will own.3

How to build wealth: Make your money work for you. Investing with intention and confidence can be one of the best ways to build savings and help you achieve your financial goals. An Ameriprise financial advisor can help you develop a long-term investment strategy that can help you improve the growth potential of your investment portfolio over time, while considering your:

  • Goals such as retirement, travel, home improvement and college for your children or grandchildren.
  • Time horizon to achieve your financial goals.
  • Investment risk tolerance, or your ability to ride out short-term market volatility for potential long-term gains.

 

The unique circumstances women face highlight the importance of building financial confidence throughout their lifetime. Your Ameriprise financial advisor can help you evaluate these varying factors, amongst others, to help you stay on track to achieve your financial goals.