Financial Planning for Single, Divorced & Widowed Women

Published by Mark Ring, Managing Partner, Founding Partner and Wealth Advisor

 

Regardless of marital status, women in the U.S. are disproportionately affected by financial disadvantages. Women do not invest nearly as much as men—40% less on average.[1] Women experience poverty at a higher rate than men, and women of color disproportionately live in poverty.[2]

So how do women take control of their finances? It’s not easy, especially since women make 81 cents for every dollar a man makes.[3] Their careers are also often interrupted by having children and caring for elderly parents, further widening the gender pay gap. (Women have also proven to be more vulnerable to COVID-19-related economic effects.[4]) And 56% of married women have their husbands handle finances for the household.[5]

Before you let these facts discourage you, let’s go over some financial planning strategies to get you on track to take control of your finances.

 

Develop a Retirement Plan

All women should have a retirement plan, yet one-fifth of women have nothing saved for retirement.[6] Look at any actuarial table, and it will tell you that women outlive men by five years,[7] so establishing a retirement fund should be a top priority. If you are working, max out your 401(k) or whatever plan your company offers. For 2021, the limits are $19,500, and $26,000 for those over 50. For IRAs, the limit is $6,000, with an additional $1,000 for those over 50.[8]

Invest

As stated above, women invest 40% less than men on average, an astounding statistic. The best time to start investing is now. Sitting out the stock market and waiting for the perfect moment to jump in means you are missing out on appreciation and compounding interest (the interest that’s paid on interest or dividends). Every time you receive a dividend and reinvest it, it only grows larger. Stocks are only one part of an investment plan; you should have a balanced asset allocation based on your goals, age, and risk tolerance. Risk tolerance takes a temperature of how willing you are to see fluctuations in the market. If seeing a stock drop makes you queasy, then a more conservative asset allocation may be appropriate.

Reduce Debt

Statistics show that women carry higher debt balances than men. Only 28% of women reported paying off their statement balance in full compared to 32% of men.[9] Women also hold 58% of student loan debt. Of the $929 billion in student loans outstanding, women owe almost $540 billion.[10] If you have a high interest rate, think about consolidating while rates are low. If you can make extra payments toward your loans, then do so.

You’re Not Alone

Finances are already often accompanied by stress and anxiety; this is only amplified for single, divorced, and widowed women, for whom some of the odds are stacked against them. But despite their marital status, they don’t have to forge ahead alone.

If you fall into one of these categories, consider working with a financial advisor. A qualified professional can help you get organized and create a plan to start saving for retirement, investing, and reducing debt. Rather than passively accepting the odds, you can take action to overcome challenges and experience confidence in your financial future. Our team at Jacob William Advisory is here to help. Contact our office by calling 410-821-6724 or emailing [email protected] or schedule an appointment at https://www.jacobwilliam.com/insights/#contact.

 

About Mark

Mark Ring is a Managing Partner, Founding Partner and Wealth Advisor at Jacob William Advisory, a wealth management firm whose sole mission is to service their clients’ needs beyond their expectations. Mark has over 30 years of industry experience and for the past decade, he has been committed to building Jacob William Advisory into one of the foremost wealth advisory firms. Mark graduated from the University of Maryland with a Bachelor of Science in Economics and spends his time outside of the office with his wife, Nancy, and his two wonderful children. He gives his time to numerous nonprofit organizations related to education and the arts, often serving as a board member. He enjoys playing tennis, golf, bicycling, cooking, and traveling. Learn more about Mark by connecting with him on LinkedIn.

 

For a comprehensive review of your personal situation, always consult with a tax or legal advisor.

[1]https://www.nbcnews.com/better/business/why-women-invest-40-percent-less-men-how-we-can-ncna912956

[2]https://www.americanprogress.org/issues/women/reports/2020/08/03/488536/basic-facts-women-poverty

[3]https://www.cnbc.com/2020/07/18/heres-how-much-men-and-women-earn-at-every-age.html#:~:text=Women%20in%20the%20U.S.%20earn,state%20of%20the%20pay%20gap

[4]https://www.mckinsey.com/featured-insights/future-of-work/covid-19-and-gender-equality-countering-the-regressive-effects

[5] https://money.cnn.com/2018/05/29/pf/women-finances-husbands-ubs-report/index.html

https://www.payscale.com/data/gender-pay-gap#

[6] https://www.cnbc.com/2020/03/05/nearly-1-in-5-working-women-have-nothing-saved-for-retirement.html

[7] https://www.advisory.com/daily-briefing/2020/07/22/longevity#

[8] https://www.betterment.com/resources/retirement-plan-contribution-limits-and-rules/#

[9] https://www.cnbc.com/2019/09/03/fewer-women-now-pay-their-credit-card-balances-in-full.html

[10] https://educationdata.org/student-loan-debt-by-gender#

 

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