Financial Resolutions for Women in 2019: Why resolving to save is not enough
As the clock struck midnight on December 31, people all over the world prepared to kiss their loved ones, blow into their noise maker, or simply giddily scream “Happy New Year!”
It is such an exciting time, the New Year, for it gives us a refreshed sense of hope, renewed energy, and an opportunity to start with a clean slate to attack our goals with vigor. We feel empowered to do the things we have been telling ourselves we would “get around to.” A New Year a New Me is a ubiquitous post throughout my Facebook feed, I’m sure you’ve seen it a time or two as well. And if you pay attention, you’ll see that the most common of New Year’s resolutions is to lose weight and to improve one’s finances.
According to the 2017 Fidelity Investments New Year Financial Resolutions study, 48% of us focus our financial resolve on saving more money for retirement and paying down debt. Those are phenomenal goals in and of themselves, but as women we need to be more specific and custom tailor our goals because:
· 60% of women worry about not having enough money to last through retirement.
· 80% of women say they are NOT confident that they can make smart financial decisions.
· Nearly 33% of women expect Social Security to be their primary source of income during retirement, yet the typical monthly payout is less than $1,400. That’s not enough to survive!
According to the Shriver Center, women make up over two thirds (68.1%) of the elderly poor, they pay more for long-term services and support, as well as having a higher statistical average of living alone. Which means they have less caregiver support and less financial resources.
One reason women are not as financially secure as men, is because we don’t make it a priority to discuss money. I encourage you to talk with your friends, your sisters, your mothers and your daughters. The more discussions we have about money, the better educated we become and the better decisions we make. Another reason women are not as financially secure is because we follow industry norms that were generated with male’s salaries, career paths, and life decisions in mind. Such as “invest ten percent of your income” to hit your retirement goal.
Let me give an example to show the discrepancy and shortfall. Let’s follow the scenario of twins, George and Georgina, who both have bachelor’s degrees and for our discussion both make $85,000 at age 30.
Georgina’s income would hit it’s max at age 40 making a little over $90,000. Contrarily, George’s income would max at 55 years old making over $110,000.
If they were to invest 10% of their incomes over the course of their work lives, at retirement age of 67 Georgina would have accumulated $1.07 million whereas George would have accumulated $1.4 million.
This is a $330,000 difference which turns into major difficulties in retirement. In this scenario, George would have enough money to last him to age 90. His lifespan is closer to 84, so he would retire confident that he would not outlive his money- he might even leave some money to his family.
Georgina on the other hand, would have enough money to last her to age 84- which would be great if she had the same lifespan as her brother. Yet, we as women are actually living longer than men. We are living on average until 87. So, following the industry norm of saving 10% of our income leaves us in a situation where we may outlive our money.
Why does this happen? Well, according to the National Women’s Law Center, white women on average make 79 cents for every dollar made by a man, while black women make 63 cents, Native American women make 57 cents, and Latina women make 54 cents. Asian-American women have the highest pay on average, 87 cents to every dollar made by a man. Furthermore, we as women tend to be the one’s who take time off to have and raise children, we are also the ones who take time off to care for elderly and/or sick family members.
So how do we set ourselves up for success? Besides talking and educating ourselves on how finances work, we need to find out our financial independence number. Your financial independence number is the amount of money you will need to accumulate to retire comfortably. This number is different for everyone. It takes into consideration how much you’d need to live off per month and the length of years you’d need income. Knowing and attaining your financial independence number would ensure you were a financially confident and secure woman in your golden years.
And a woman who is more financially confident and secure is a happier woman, and a happier woman is going to be better able to nurture, share, and give support to all those in her life.
Written by: Stephanie Georgakopoulos
Stephanie Georgakopoulos has been with Primerica Financial Services for over five years. She recently started Financially EmpowHERed, which specializes in empowering women to become properly protected and financially secure, thus facilitating each woman to create her best life and fulfill her unique purpose. Stephanie received her bachelor’s degree in International Business from the University of Indianapolis and her master’s degree in Finance from Strayer University. When not working, Stephanie enjoys spoiling her fur baby, a Pomeranian named Achilles; being an active Toledo Talktails board member; being a committee member for NAMI walks; and learning French. She can be contacted at firstname.lastname@example.org or 419-266-8692.