As women, we have faced unique challenges throughout our lives, especially those of us in our 40s and beyond, but things are gradually changing. Various studies show that young women today are much more financially independent than their male counterparts.
Financially Independent Women
For example, 57.2% of women were working in 2013, compared to 34% in 1950, according to the Bureau of Labor Statistics. But beyond the increase in women participating in the workforce, we tend to have our own secret tricks. These “tricks” have made us more financially independent than men, despite the fact that the long-standing wage gap we’ve all heard about has made it more difficult for us to make as much money as them.
A study conducted by Bank of America and USA Today in 2016 found that 61% of women between the ages of 18 and have money saved, compared to 55% of men. Thirty-four percent of us do our own taxes, compared to 28% of men, and 33% of us have our own health insurance, compared to 25% of men. It’s a good thing we have better money habits than men because another study from NerdWallet found that we have to save $1.25 for every $1 men have to save. Or perhaps we’ve learned our lesson the hard way: generations of women passing down what it takes to be financially independent despite struggles.
ValueWalk's Raul Panganiban interviews Dr. Kathryn Kaminski, Chief Research Strategist at AlphaSimplex, and discuss her approach to investing and the trends she is seeing in regards to quant investing and hedge funds. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with AlphaSimplex's Read More
Here’s where the advisor comes in
A key part of being financially independent is having the benefit of collaborating with a good financial advisor. That’s because making sure you have a sound retirement strategy is the only way to ensure that you will have enough money through the end of your life. Even financially independent women can make use of a financial advisor; here are five things you can do with an advisor that you really can’t do so well on your own.
- Get an objective standalone report from an independent financial advisor that shows you exactly where you stand in relation to your investment goals. This should be an in-depth report that’s more than what you could get on your own, like at Fidelity or an online do-it-yourself platform. This report should cover every aspect of your retirement, from where you stand now to where you need to be when you retire.
- Gain a full understanding of your investment strategy and make sense of how it ties together under current events, such as under a new president, and aligns with your own philosophy. Discussing your biggest fears and highest hopes gives you a better view of your weaknesses and strengths. Without a full understanding of where the investment strategy comes from, it will be harder to put it into action and then stick with it.
- Nail down all the major timing questions related to retirement: when you can really stop working, when to tap your nest egg and start taking social security, and when, or if, you can give money away for your legacy. These timing questions are critically important.
- Make your investing strategy your own. Financially independent women usually have an idea of what they want their life to look like at retirement and how to get there, but a qualified financial advisor can offer minor tweaks based on the fact that they spend all day at least five days a week studying the markets rather than doing it part time or as a hobby. Look at real estate or other investments you might not be considering at this time. A holistic financial planner can help you find ways to incorporate these other assets into your portfolio.
- Reduce your taxes if you can. Some investment strategies will help you cut your taxes now, while others will save you money later. The best plan of attack is a mix of these so that you’re not saddled with all the taxes from much of your life at the same time.
Real financial independence is about much more than just saving enough money, doing your own taxes or even making your own investment decisions. Whether single or married, financially-savvy women know when to ask for help, why they’re asking for it and who to talk to about their serious money and investing decisions.
Article by Pam Krueger