Women in our society have a pervasive mindset problem around the way they approach financial planning. The most critical concerns revolve around health and longevity, gender roles within relationships, risk management, and estate planning. Each of these issues has a material impact on a woman’s long-term financial wellbeing, and therefore deserves careful examination in building your financial strategy. Here are five key actions that will help you take control of your financial future.
1. Understand the longevity differential. The average American male life expectancy (meaning there’s a 50% chance of an individual reaching that age) is age 76, while the average American female’s life expectancy is 81, according to Statista, 2018. What happens if you are in the 50% that lives beyond the average lifespan? In trying to have a meaningful discussion about this, clients inevitably cite the ages that their parents and grandparents died as a reason that we don’t have to consider the issue. That’s a misguided assumption, because while genetics are relevant, your relatives didn’t have access to the exponentially expanding medical breakthroughs and life-extending technologies that we do today. Think of all the people that are living with cancer now that likely would have died shortly after diagnosis only 10 or 20 years ago! Given the realities of medical science, you should be positioning your assets and future cash flow to last well into your 90’s or even past 100.
2. Create a collaborative and transparent dynamic around money in your relationship. The number of widows and divorcees that end up in my office with little to no knowledge of their financial situation is appalling. It’s important for every woman – single, partnered or married – to create at least a minimal level of ownership in your family’s finances. You need to understand the day-to-day cashflow in your household even if it’s “not your job.” Delegating the entire issue to your spouse is not a valid excuse for not knowing your total monthly expenses or why your respective retirement accounts are positioned with a certain risk model. I recommend a weekly financial meeting over a bottle of wine.
3. Attend an annual review with your financial advisor each year. It’s fine if your spouse is the one who’s most involved in the ongoing relationship with your family’s advisor. However, that’s not a valid excuse to skip the annual review. No different than your annual physical, this meeting is a critical tool to ensure that the family’s financial plan is on track. It may not be a barrel of monkeys, but “check the box” anyway by making sure the review happens and being an active participant in it. And just to be clear, “active” does not mean that if the market goes down, you necessarily change your risk management strategy or investment portfolio. It simply means you attend the review, pay attention, and understand what’s going on. As Mark Twain said, “Denial ain’t just a river in Egypt,” so show up and engage.
4. Perform a deep analysis on all risk management scenarios. Generally speaking, women tend to be more cognizant about risk and aware of various risk scenarios than men. That’s a start, but you need to take that awareness beyond basic steps like buying insurance. Have your advisor run stress tests on various scenarios that are customized around your expenses and assets. Consider scenarios like an early death, a 20% bear market, an extended care event, and other potential challenges. Look at the impacts of each scenario and explore the probability of success your current assets and cash flow yield in meeting your long-term needs in each. These outputs will create more clarity about where you stand and help you identify gaps and blind spots.
5. Make sure your advisor has flowcharted your current estate plan. By clearly integrating your estate documents (and yes, you must have them!) with your current assets and showing how each of them would pass on if you ran afoul of the proverbial bus today, you can be confident that things are truly up to date. If you don’t have a will or estate documents, the exercise should show you how your current assets will pass based on your state’s intestacy law (which applies to estates of those who die without a will). It’s been my experience that very few people have updated their assets and documents to the degree they believe.
Knowledge is power. Choosing to not know or to assume that your financial world will magically be taken care of without your full engagement is not helping you or your family. Take control now, because you owe it to yourself to have your financial world in good shape.
Meredith Moore is a 20-year veteran of the financial advisory industry who specializes in bringing a customized approach to support the highly personal dynamics that govern her clients’ relationship with money and success. She is the recipient of numerous industry awards and a noted speaker and writer focusing on the intersection of power, money, and gender within relationships. Ms. Moore can be reached at www.moorewealthmgmt.com.
Meredith C. Moore, Registered Representative, offering securities through NYLIFE Securities LLC, Member FINRA/SIPC, A Licensed Insurance Agency. 1125 Cambridge Square, Suite C, Alpharetta, GA 30009 (770) 587-0281. Financial Adviser offering investment advisory services through Eagle Strategies LLC, A Registered Investment Adviser. Moore and Associates Wealth Management is not owned or operated by NYLIFE Securities LLC or its affiliates. Moore and Associates Wealth Management, as well as NYLIFE Securities LLC and its affiliates, do not provide tax, legal or accounting advice.