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A Woman’s Need for Financial Planning

Women need proper exposure to financial education in order to provide a financially secure life for them and their families. Many studies over the years have focused on the differences between male and female investors.¹ Most of them have concluded that women are better investors, based primarily on their ending balances. Women tend to buy and hold longer, which is the primary reason for their better returns.

Women are also more likely to participate in their company retirement plans than men. ² However, single women whether divorced, widowed, or single by choice, do save a much greater portion of their income than do their married counterparts. I think it is due to a sense of needing to provide for themselves. Married women need to plan their financial futures with some consideration that they may be single at some time in their lives. Statistically, the average age of widowhood is 57, and divorce is still at least 50% in the US, and yet, 40% of married women are still not involved in the financial decision making process.

One in ten female retirees and one in five single women, over the age of 65, have annual incomes less than $10,000, which means they are living primarily on social security. There are a few factors that affect this. First, on average, women still earn less than men, however that is slowly changing. According to the 2006 US Census Bureau, 18% of wives out-earned their husbands, and many more females are starting to out-earn their male counterparts. But we are still behind in overall earning power, which effects how much we have to contribute to our 401ks. The second factor is that we live longer, and therefore, our money has to last on average 7 years longer.

We also spend fewer years in the work force. We take time out for childcare when we are younger, and are more likely to leave the workforce in our later years to care for ailing parents. On average, a woman loses 11½ years of her working career, while a man may only lose 13 months. This has a dramatic affect on the amount of money you contribute to your retirement and to the amount contributed to social security. Many women who work for their spouses never take a paycheck, contribute to social security, or establish a retirement account. If they become disabled, they don’t even qualify for SSI.

What if you develop a serious illness, get divorced, become widowed, or lose your job? How can you plan for all of these scenarios. Financial planning can be as simple as starting with a budget, or using a software program to help you get control of your expenses. Writing down your accumulation and debt reduction plans will help make them real, and will make them achievable. And you must have a filing system you can follow easily. Set a day every week to catch up on your bills and track your progress.

If someone relies on your income, or you rely on someone else’s to maintain your home and lifestyle, GET LIFE INSURANCE!! Investing will build your future, but you need time to accumulate and grow your assets. No financial plan is valid without the foundation being protectedfirst.

² Employee Benefit Research Institute, Oct 2008

*Securities offered through LPL Financial, Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. Old National Bank and Old National Investments are not registered broker/dealers and are not affiliated with LPL Financial. Old National Bank, Old National Investments, and LPL Financial are separate entities.

Sandy Derby, CFP®, ChFC LPL Financial Advisor, VP Southwest Michigan Region 5003 Century Ave Kalamazoo, MI 49006 269-459-0474 TM

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