Kelly Danielson, CPA, CFP talked about the 5 financial pitfalls women need to avoid…
Modern women are more educated, have college degrees and work outside the home but with that comes an increased responsibility. Many are also divorced, single or may be at some time. Our mothers and Grandmothers relied on their husbands for retirement – social security or pension, but that is no longer the case. Women need to start thinking about retirement and the sooner you start, the better off you will be.
So, here are the 5 financial pitfalls:
1. Not being involved in financial decision making. Now why is this? Time is a big one- women have careers, kids, maybe aging parents to take care of. Another factor is they just don’t feel qualified or educated enough to get started.
2. There is a good chance (90%) that you as a woman, will someday be on your own. Women live longer than men and typically marry older men, so 75% are widowed at 56 years old and 1 in 4 of these become broke within 2 months. Divorce is also very common.
3. Not starting to save soon enough. The sooner you start investing in a retirement plan, the more time it has to grow. For a lot of women, leaving a job to take care of kids, frequent change of job and just that they earn less than men are all things that keep them from starting to save.
4. No financial gameplan, you need to figure out how much money you will need for retirement.
5. Not seeking Professional Tax/ Financial Advice
And now that we know the pitfalls… What should we do?
1. Get a Financial Plan – know where your money is and get educated – Kelly recommended www.wiserwomen.org, books and professionals.
2. Know the reality of living on your own – make retirement a priority, plan for caring for kids, work at the highest salary for as long as you can
3. Think about long term care needs – who will pay if you have to go to a retirement home someday?
4. Contribute to retirement and set savings goals – retirement accounts are not for vacation/ emergency and it is easy to save by giving up some things, like not eating out as much.
5. Develop a financial gameplan – a good financial plan will focus on asset accumulation, protecting family and standard of living and create a guaranteed paycheck for life.
6. Seek Professional financial advice – do this sooner than later.
There are three important things to look for in a financial advisor:
- Trust – they should want to know a lot about you, your goals, history, family situation, etc.
- Communication – they should listen– we all can tell when someone isn’t listening
- Educate you – they should want you to know why
You also need to understand the role of the advisor, which is not to make you rich, just to make sure you are never poor, and also to help you make logical decisions, not emotional decisions.
Recap written by Rebecca Elliott