Alec Giesting

It’s Women’s History Month! Let’s go over why financial planning is important for women.

While there’s little doubt women have taken major strides professionally and socially over even the past few years, it’s still all too common for them to be left out of the financial discussion. Whether that happens on their own accord or because they simply become an afterthought in the conversation, their exclusion can be extremely damaging not just to their own future but to both members of a couple or an entire family. Well, this month is Women’s History Month, so while there is never a bad time to celebrate the women who mean so much to us, this is the perfect opportunity to discuss their role in financial planning and its importance. Let’s go over five reasons why financial planning is crucial for women.

1. It Can be Empowering

Whether a woman is a working professional, a stay-at-home parent, a single individual or a retiree, her role goes far beyond the simple financial aspect of the planning process. It should also be uplifting and empowering, giving you a sense of purpose when it comes to both your money and your dreams. It can also build confidence when you truly understand the systems our society is built around, and being financially literate has the potential to make anyone feel like their goals are achievable and they can find the right path, no matter what the future holds.

It’s also about equality. While money isn’t everything, there’s no denying its power and ability to dictate a person’s ability to live a comfortable lifestyle. As an equal partner in a couple, or even as an individual, understanding financial concepts and knowing you have an easy-to-follow roadmap toward your goals can be motivating and inspiring.

2. Women Live Longer Than Men

According to the CDC, the average life expectancy for women is 79 years, while it’s just 73 for men ^[1]. While this might not sound drastic, that six-year period can feel like an eternity for those who face any sort of financial struggles. That means women must strategize for six more years of living expenses. While it might be true that if your spouse passes away first you may only have to cover yourself when it comes to costs like medical bills, food, everyday living and more, it’s important to remember new obstacles that potentially come into play. A mortgage payment, for example, might remain the same, while only one person’s retirement money might be coming in.

That’s why planning for adequate retirement income is critical for women. For instance, some pensions are only paid to one spouse. And while you might inherit retirement accounts like 401(k)s and IRAs, you will only receive one Social Security payment going forward if your spouse passes away before you. While it will be the larger of the two checks, it is still necessary to have a plan if your income were to decline.

Additionally, longer lifespans, especially after the loss of a partner, can potentially lead to the need for long-term care, which is extremely pricy and not covered by Medicare.

3. Women Make Less on Average

In addition to longer lifespans, women tend to earn less than men for a multitude of reasons. In fact, a study from the Pew Research Center showed women earn, on average, 82% less than men, which is not much better than the 80% they earned more than 20 years ago ^[2]. This is true despite social advancements that have led to more women in power as well as further discussion about the gap. Of course, there are many theories about why that gap exists. For example, some women work in different industries offering lower average wages and fewer benefits.

Still, however, even choosing a different career path cannot always help, especially when pay is oftentimes determined by experience or hours worked. The obligation of caretaking, especially for children, typically falls on women, meaning they must exit the workforce and forgo work experience and potential advancement. Lower wages also mean they oftentimes have less to put away for a retirement that is already longer than the average man’s, and those lower wages might also equate to lower Social Security or pension payments. Simply put, women face more obstacles, possibly further necessitating a proper financial and retirement plan.

4. Women Are Often Responsible for Loved Ones

As previously mentioned, women are often saddled with the responsibility of exiting the workforce to raise and provide for children, forcing them to forgo opportunities to gain experience and earn more money. Additionally, they may be forced to tap into savings, income from part-time roles or shared income with their spouse to ensure the house is properly run, a full-time job in and of itself. Again, that can leave less money for a woman to contribute to savings and investment vehicles for retirement.

Additionally, caregiving responsibilities do not always end with children. Many women between the ages of 40 and 60, which is often a high-earning period used to sock away funds as you approach retirement, are part of what’s being referred to as the “Sandwich Generation.” In this sandwich, children are one slice of bread while elderly parents are the other, forcing women to be the meat, veggies and condiments between the two to financially support both parties. Furthermore, women make up 60% of the Sandwich Generation, and they spend, on average, 45 minutes per day more than men caring for children and parents ^[3]. That obligation can make it even more difficult to save for retirement, whether it’s because they’re forced to step away from work or they’re using more of their funds to provide for dependents.

5. Women Are Set to Inherit the Majority of the Wealth in the US

Presently, women control about a third of this country’s wealth, but we are heading toward a major change in financial power. In one of the biggest transitions of wealth in American history, women are set to inherit the better part of $68 trillion ^[4]. This should give some women a significant advantage in their own retirement plans.

But with a great inheritance comes great responsibility. Without a proper plan or a firm direction for those trillions of dollars, it can be moot. That’s why it’s crucial for women to take an active role in financial planning now. They shouldn’t wait until they actually inherit the money; they should be working with those they might inherit that money from, as well as a financial professional, to gain the right tools and knowledge to purpose that influx of cash for a long, successful retirement.

If you’re ready to become more involved in the financial planning process, please give us a call today! You can reach PCIA Denver at 1800.493.6226.

 

Sources:

1. https://www.cnbc.com/2023/03/01/why-american-men-die-younger-than-women-on-average-and-how-to-fix-it.html
2. https://www.pewresearch.org/short-reads/2023/03/01/gender-pay-gap-facts/
3. https://www.theskimm.com/stateofwomen/sandwich-generation-costs-women
4. https://www.cnbc.com/2023/12/12/why-the-68-trillion-great-wealth-transfer-is-an-opportunity-for-women.html

This article is not to be construed as financial advice. It is provided for informational purposes only and it should not be relied upon. It is recommended that you check with your financial advisor, tax professional and legal professionals when making any investment decisions, or any changes to your retirement or estate plans. Your investments, insurance and savings vehicles should match your risk tolerance and be suitable as well as what’s best for your personal financial situation.

Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., Suite #150, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”). Securities are offered by Registered Representatives through Private Client Services, Member FINRA/SIPC. PCIA and Private Client Services are separate entities and are not affiliated.

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Money can be a major obstacle for couples. Here are a few ways to overcome it.

Do you remember when you first met your partner? So many things about them might have captivated you. Maybe it was their eyes, their hair or their smile. Maybe you started talking and you fell in love with their outlook on life, their fun-loving attitude or their sense of humor. We’re willing to bet, however, it wasn’t your aligned financial philosophies that initially drew you to each other, even if financial stability was high on your list of priorities for potential partners.

At the same time, maybe that should be something you look for in your other half. Nearly 50% of Americans say they argue with their significant other about money, while 41% of Gen Xers and 29% of baby boomers attribute their divorce to financial disagreements ^[1]. One of our goals is to give you the stability that can eliminate financial stress, trimming your worries when it comes to your happily ever after. Here are six tips for couples looking to achieve their financial goals together!

1. Communicate Effectively

Of course, communication is the key to a healthy relationship. It’s no secret. In fact, you’ve probably heard this old adage your entire life, but hearing it is different from comprehending it and acting upon it. Additionally, while it’s important when sharing your needs and overcoming conflict, it’s just as important to have open, honest, confident communication about your finances. In our experience, the majority of the battle is normalizing the conversation. Remember, you’re not just combining finances; you’re combining your entire lives, so this discussion shouldn’t be taboo. To make it easier, it can be a good idea to start with simple topics. Go over things like income, how you feel about different retirement accounts, your experience investing or how comfortable you feel with risk. You can then let the conversation naturally evolve to encompass more complex topics, or you can tackle new problems as they arise. It’s key to consider that you’re equal partners, both in life and in money, and it’s crucial to have these discussions before and during a serious relationship.

2. Choose a Strategy

Once you’ve broken the barrier to financial discussion, it can be helpful to choose a strategy for how you’ll combine your finances. Some couples, for example, find it easiest to simply combine all their assets, giving meaning to the phrase, “What’s mine is yours.” Others, however, may feel more comfortable keeping their assets separate and handling their own personal expenses. Most commonly, a couple will land somewhere in the middle with a few select combined accounts and some solo accounts. This can help each person maintain some of their individuality and independence while also offering some guidance as to who’s responsible for different financial obligations. Spend some time discussing these options with your partner, and be completely open and honest to foster healthy communication in the present and future.

3. Set Measurable, Realistic Goals

Identify goals that are important to both of you, especially if you want to achieve them together. Whether those are short- term goals or long-term, this gives you something to work toward, unifying your vision and objectives to keep you on the same page. It can also help you maintain control over your financial decisions and your priorities. Ensuring those goals are measurable and realistic is also important. In addition to the satisfaction that comes with watching yourself climb toward your objectives, reaching measurable milestones can be motivating, pushing you and your partner to continue saving and spending with the future in mind.

4. Budget Effectively

As a couple, you’re a team. That means working together to reach common goals. There’s also power in finding financial strength together, so constructing a budget, controlling your spending, and expressing your thoughts freely can help you grow as a duo. When building that budget, it’s important to start by having a conversation about your priorities. Lay them out clearly, and work together to determine which expenses are “needs” and which expenses are “wants.” You’ll probably want to prioritize essentials, like food, your home, your transportation, and other necessary living expenses. You may want to move on to outstanding debt, determining how much you can realistically pay down in a given period. As partners, you should also hold each other accountable, knowing that sticking to the budget is what’s better for both. Then, know you can tweak your budget as your circumstances change and evolve.

5. Choose the Right Financial Partner

The right financial partner or professional can help you develop and work toward your goals. Oftentimes, this means finding someone who understands your current circumstances, is able to read you and your partner as people, and is willing to work in your best interests. This can be tricky, but remember, this is your livelihood we’re talking about. It’s more than understandable if you’re skeptical when choosing someone to control your assets. Additionally, if you think it’s the right time to start working with a professional, ask many questions to determine if they’re the right person to help you achieve your goals. While you may feel like you’re on the hot seat as they ask about your saving and spending, it’s just as much of an opportunity for you to assess how effective or helpful they will be in the construction of your plan or portfolio.

6. Develop an Actionable Plan

Once you understand your cashflow, habits, budget and goals as a couple, it’s time to develop a plan that offers specific direction and sets you into motion. Oftentimes, this is the blueprint for your future, giving both you and your partner rules to adhere to. It should also be comprehensive, meaning that it accounts for each aspect of your life. Determine how you’ll utilize specific retirement accounts, as well as if you’re comfortable having your money exposed to market risk. You can also explore options for insurance policies, which can be crucial if you want to protect your loved ones in the event of the worst. Furthermore, revisit your plan on a regular basis. Maybe your risk tolerance has changed, you feel you can contribute more to your savings vehicles, your beneficiaries have changed, you need different levels of insurance coverage, or you’re ready to graduate into retirement. Your plan plays a key role in achieving both your short- and long-term goals, and having one that you believe in can make all the difference.

We believe that money should never hinder your relationship. If you have any questions about how you can effectively combine and develop a plan for your finances as a couple, give us a call today at  (303) 771-2700!

 

Sources:

1. https://www.marketwatch.com/story/this-common-behavior-is-the-no-1-predictor-of-whether-youll-get-divorced-2018-01-10

This article is not to be construed as financial advice. It is provided for informational purposes only and it should not be relied upon. It is recommended that you check with your financial advisor, tax professional and legal professionals when making any investment decisions, or any changes to your retirement or estate plans. Your investments, insurance and savings vehicles should match your risk tolerance and be suitable as well as what’s best for your personal financial situation.

Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., Suite #150, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”). Securities are offered by Registered Representatives through Private Client Services, Member FINRA/SIPC. PCIA and Private Client Services are separate entities and are not affiliated.

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The end of the year is upon us. Here are some tasks to check off before 2024 arrives!

It’s that special time of the year when the holiday spirit is in the air, good friends are always near, and family time fills up our schedules. It’s also the perfect time to take financial inventory and reassess your plan to see if it still aligns with your goals. You may need to make tweaks, as your circumstances have almost certainly changed. Maybe that’s because of a major life event or an unexpected expense, which most people experience or incur over the course of a year. It’s only normal, but it can be helpful to ensure that you’re still on track toward the future you idealized. Here are a few things you can do to prepare for the turn of the calendar!

1. Review Your Financial Plan

Your financial plan is never meant to be a “set-it-and-forget-it” type of document. Just like the economic landscape, it’s supposed to change, and the end of the year can be the perfect time to make necessary adjustments that get you back on track toward your goals. Sometimes, those changes can even be for the better or because you had a successful year. For example, maybe you are quickly approaching or have already surpassed a goal you set at the beginning of the year. You can recalibrate your approach for both the short and long term to keep yourself motivated. If you find that you’ve suffered an unfortunate setback, that’s also okay. Your plan is a great place to start when trying to get back on track toward your ideal destination.

2. Adjust Your Monthly Budget

As we near the end of the calendar year, you may have a better idea of your current income and expenditures. Sometimes, that can help you create a more accurate budget, especially if that budget aligns with your financial plan. Additionally, you might have received a nice annual bonus or raise, giving you some more leeway or freedom in your budget, or giving you extra funds to save or create an emergency fund. On the other hand, maybe you had a baby or accrued unforeseen home, auto or medical bills, forcing you to take a moment and reprioritize. Whether you believe you’ve taken a step forward or a step back, mapping out your expenditures and tweaking your budget accordingly can be helpful as we head into 2024.

3. Review Your Investments

How did your investments perform this year? If you can’t answer that question, it’s probably a good idea to look, especially if you plan on using that money in retirement. Remember, the years leading up to retirement and the first few years of retirement are the most dangerous times to experience market volatility, as you likely take those losses when your asset totals are the highest. It can also be helpful to further diversify your portfolio or build a new asset allocation that aligns better with your goals. Though diversification certainly doesn’t promise either growth or protection, different asset classes can offer different features, potentially giving you the opportunity to achieve protection through varying and potentially less volatile investment or saving vehicles.

4. Recalibrate Your Retirement Account Contributions ^[1,2,3,4]

No matter which stage of your career you’re currently at, it’s important to know how much of your income you can contribute to your various retirement accounts, such as 401(k)s, IRAs, 403(b)s, 457 plans, SEP IRAs and SIMPLE IRAs. For example, in 2023, the contribution limit for traditional and Roth IRA accounts is $6,500. That amount will increase to $7,000 for the 2024 tax year. If you’re older than 50, you can also make catch-up contributions up to $1,000. The contribution limit for a 401(k) participant is $22,500 for the 2023 tax year; however, that will rise to $23,000 in 2024. Catch up contributions of up to $7,500 can also be made to 401(k) accounts for those 50 and older. NOTE: These limits are imposed on individuals, not accounts, so the limits are on total contributions to all of your different employer-sponsored accounts or IRAs. It’s also important to remember that you can contribute to your IRA for 2023 until Tax Day of 2024, which is on Monday, Apr. 15. 401(k) contributions, however, must be made by the end of the year.

5. Take Your RMDs ^[5,6]

If you must begin taking RMDs in 2023 or you’ve already begun taking RMDs, those funds must be withdrawn by the end of the calendar year to avoid incurring a 25% excise tax. That makes right now the perfect time to ensure that you’ve withdrawn an adequate amount, as there is still time to pull from your qualified retirement accounts. It can also be beneficial to speak to your financial advisor who can help you calculate your RMDs, as they’re typically determined by your expected lifespan and asset total. To see when you must begin taking RMDs, please refer to the chart below!

Date of Birth	RMD Age
June 30, 1949, or Before	70 ½
July 1, 1959, to Dec. 31, 1950	72
Jan. 1, 1951, to Dec. 31, 1959	73
Jan. 1, 1960, or After	75

6. Spend Money Left in Your FSA ^[7,8]

Flexible savings accounts, or FSAs, are accounts funded by pre-tax money that allow you to use tax-free funds to pay for qualifying health expenses. They can be extremely helpful for those looking for tax advantages for services that are not covered by their health care plan, including deductibles and co-pays. While you may have a grace period provided by your employer, with most FSAs you must spend the money for qualifying health expenses by the end of the year or risk losing it. Some expenses that traditionally qualify include general wellness appointments, annual physicals, visits to specialists, dental cleanings, eyeglasses or in-home care equipment.

Similar to FSAs, HSAs, or health savings accounts, can be used for medical expenses, but the accounts are permanent and stay with the owner. HSAs are tax-deductible and can grow and build up tax-free to cover a long list of medical, health, dental and vision expenses, usually in retirement. In order to open and begin contributing to an HSA, you must purchase a high-deductible health plan that qualifies, or be offered an HDHP through your employer. You cannot contribute to an HSA when you are over the age of 65.

7. Review Your Workplace Benefits and Beneficiaries

Most benefits plans change on a year-to-year basis, and those changes are typically outlined by your human resources department during the open enrollment period. If your employer provides benefits packages, be sure to go through your benefits guide to know exactly what you’re entitled to and how you can leverage those perks to your advantage. For example, you may be able to select from different health care packages, or you might be able to opt into an HSA or FSA. It’s also important to review beneficiaries who are on your plan, as their needs may differ on a year-to-year basis.

8. Talk to Your Financial Professional or Advisor

Your financial professional, planner or advisor is meant to be your personal advocate and consultant when it comes to your financial and lifestyle goals. That means they can help you determine whether you’re on track to reach your goals. If not, they can work with you to set more reasonable expectations, but if you find yourself on the right track, they can help you further purpose your money for both the short- and long-term future. Additionally, your advisor should soon be calling to set up an annual meeting with you to discuss updated options, new regulations, developments in the marketplace and more. As we close out the year, now is the perfect time to have that meeting and prepare for new circumstances and the new year.

If you have any questions about your year-end financial to-do list and how you can prepare for the year ahead, please give us a call today! To reach PCIA Denver, call (303) 771-2700, use this form, or contact an individual advisor. 

 

Sources:

1. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits
2. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits
3. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-catch-up-contributions
4. https://www.thinkadvisor.com/2023/09/27/smaller-401k-ira-contribution-limit-increases-expected-in-2024/
5. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
6. https://www.orba.com/what-is-your-required-minimum-distribution-age/
7. https://www.goodrx.com/insurance/fsa-hsa/hsa-fsa-roll-over
8. https://www.investopedia.com/articles/personal-finance/082914/rules-having-health-savings-account-hsa.asp

This article is not to be construed as financial advice. It is provided for informational purposes only and it should not be relied upon. It is recommended that you check with your financial advisor, tax professional and legal professionals when making any investment decisions, or any changes to your retirement or estate plans. Your investments, insurance and savings vehicles should match your risk tolerance and be suitable as well as what’s best for your personal financial situation.

Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., Suite #150, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”). Securities are offered by Registered Representatives through Private Client Services, Member FINRA/SIPC. PCIA and Private Client Services are separate entities and are not affiliated.

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