Women and Retirement
I don’t know about Get Rich Slowly readers, but I can tell you that the majority of Motley Fool readers are guys, and that’s true of most financial publications.
That men are more likely to be consumers of investment information could explain the gender gap in financial literacy — especially among older Americans — that some studies have uncovered. I don’t mean to demean the better-smelling sex; in fact, some studies have found women deliver better investment returns than men do. But the deficit in financial literacy is especially troubling given the other challenges women face in retirement planning. Some of these challenges are faced by all women, while others pose particular problems for women who are or were married, especially if they put their careers on hold to raise a family.
The Troubling Statistics
Here are some stats to put it in perspective:
- Women, on average, earn 76% of what men earn, resulting in an average lifetime earnings differential of $250,000.
- Women leave the workforce for an average of 12 years to raise children or care for relatives, resulting in a loss of $550,000 in wages over their lifetimes.
- The average woman lives five years longer than the average man. Sounds good, but it means women have to stretch their retirement savings longer.
- Some of the biggest health-care costs are incurred in the year prior to death, which reduces financial resources left to surviving family members. Those survivors are most likely to be women, since wives tend to outlive their husbands.
- Women of the baby boom generation are more likely to be divorced than women from other generations and to have fewer children to rely on in their old age.
- A couple must have been married 10 years before an ex can claim spousal Social Security benefits. But most divorces occur within the first seven years.
In addition, here are some sobering facts from the Center for Retirement Research:
- As employers drop defined-benefit plans (pensions) for defined-contribution plans (401(k)s), divorced women may suffer. According to the center’s director, Alicia Munnell, “Traditional pensions give wives an automatic claim on their spouse’s benefits, but 40l(k) plans usually do not.”
- Despite being an average of three years younger than their spouses, wives usually retire when their husbands do. This can cut short their careers, savings, and retirement benefits.
- Among single women 65 and older, 28.2% are considered poor or near poor, compared with 22.7% for non-married men and 8.1% for married people in the same age group.
- A married couple’s combined Social Security benefit is reduced by one-third to one-half when one spouse dies. Also, payments received from a defined-benefit pension might be reduced or eliminated.
What’s a Woman to Do?
The solution for all women — single, married, widowed, or divorced — is to take control of their financial futures. It stands to reason that since women live longer, they should consider retiring later. Postponing retirement can mean a larger nest egg and Social Security benefits. Note that Social Security benefits are based on your highest 35 years of earnings. If you worked fewer than 35 years, those no- and low-earning years might be used to calculate your benefit. By working a few more years, you can increase your benefit. Also, non-working spouses can contribute to a spousal IRA, allowing for more tax-advantaged savings.
For married couples, both spouses should be involved in the day-to-day management of the finances. If one person handles the finances and the other doesn’t want to take over after he or she becomes widowed, assemble a list of trusted advisors who could assume those duties.
Remember that a married person can receive a Social Security benefit based on his or her work record or their spouse’s work record, whichever is greater. Because of their lower lifetime earnings, approximately two-thirds of wives receive benefits based on their husband’s record. But if the husband applies for Social Security benefits early — and thus receives a reduced monthly payment — the survivor benefit will also be lower.
For this reason, husbands should consider postponing the application for Social Security benefits as long as possible. The same principle generally applies to defined-benefit pensions, so be sure to consider the benefit to the surviving spouse when you’re deciding when to receive your pension and in what form.
Become A Money Boss And Join 15,000 Others
Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)
There are 94 comments to "Women and Retirement".
I think the data presented is spot-on. Even highly educated, highly compensated women often interrupt their careers to take time off for preganancy, child birth and child rearing. Even women who limit time off for child related issues often end up earning less than peer males due to perception of commitment (i.e. the mommy track).
Women don’t want to think about the “what ifs” – what if I get divorced, what if my husband dies, and the more common, these days, what if my husband gets laid off – and many choose to take extended time off for kids with the idea that it will be easy to go back to the work force. My friends who have elected to take time off have found the on-ramp back to full time work to be very bumpy.
I’m not sure what the solution is since the bulk of child rearing still falls mostly to women and there is no way around the fact that only women can birth or nurse babies.
As someone who worked for many years in corporate American, I found the best solution was to go to work for myself, and build a small business. I’m having far too much fun writing books and blogging. It takes a while, but it also takes me away from sex and age discrimination, something that I was getting “sick and tired of being sick and tired” of…the quote, by the way, is from the late Fannie Lou Hamer, a great woman and a great activist in the modern civil rights movement. She was a strong woman who stood her ground and who should be remembered during Women’s History Week.
Great post. I am a young woman, but this post is very informative to me and all the women in my family. Thank you so much. Such a wake up call for me this morning
Great article with lots of intersting info. All those statistics are why I fully funded a Roth IRA for 2008 and 2009, on top of a 10% contribution to my 401K at work. I want to make sure I save as much for retirement as a I can now, so that when I take some time off work to start and raise kids, I won’t be so far behind.
I think it’s interesting I’m ready to retire at 26! 😉
I second Allison’s comment 100%.
I have found that women are more likely to say things like, “I can’t” or “the math is too hard.” We’ve been raise to NOT think about it. Prince Charming syndrome. Sadly, when Prince Charming arrives, he often knows about as much, and life goes on from there.
These are problems that many women don’t realize until they run smack into them. My husband wants to take an early retirement (at age 42, thus a reduced benefit) so that he can embark on a second career. I have been asking him to carefully weigh the options since I am aware that, if he passes before I do, I will only receive 40% of his already greatly reduced pension benefit. He just wants to do his thing…
“That men are more likely to be consumers of investment information could explain the gender gap in financial literacy – especially among older Americans – that some studies have uncovered.”
I am requesting the links/research citing for this statement. Which studies/when.
I’m doing a study right now solely on Echo Boomers regarding finances, and although there are some positive financial aspects of the Echo Boom (for instance, the wage gap between males and females of the same profession is more equal), the average debt of females greatly exceeds males in two main areas: student loans and credit card debt. Remember, though, females are more likely to pursue college than males, so the student loans are not surprising. Males, however, are more likely to have auto loan debt than females.
As far as investing goes, when I ask Echo Boomers how much they’ve saved for retirement, the response is usually, “I don’t know, but I know I have some account at work,” so I’ve been unable to get a good response.
This is such a great topic to emphasize!
I would like to add that it is such a mistake for many women to ignore their finances simply because they don’t identify as “feminists”. The fact is, you can’t rely on a man to always be around to take care of you, even if that is what you want.
I also think that particularly for younger working women, this should be a huge wake-up call. They need to be saving money for their futures, and not just spending it all, assuming that prince charming will swoop in at some point and save their financial rear ends. The media, TV shows etc all imply that the only thing a young woman has to worry about is landing that guy–idiotic.
Sarah @7, there’s a 2006 study by Dr. Annamaria Lusardi of Dartmouth College that shows a gender gap in financial literacy. I couldn’t gain access to the actual research paper, but here’s an article where she talks about her research and its implications:
http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4306
I’m about to head to the gym, but I wanted to pipe in quickly in response to Sarah (#7). I wanted more links, too, and would have used more if I’d written the article myself. But I know that from my own reading on the subject, that Robert’s not making this stuff up. There is a financial literacy gap between the genders and it’s not because women are stupid or lazy or anything like that. It’s because of the reasons Robert cites. Yet when women do take an active role in their finances, they generally do a better job than men. Maybe other readers can point to actual studies — or I can try to do some research on my own later today. Of course, Gail’s book (#5) probably has plenty of stats in it, too. (Gail rocks!)
I think that these statistics are changing, perhaps slowly, but are changing – then again I run with a pretty affluent (college educated) group of women – in their mid 50s and younger. But most of the women I am around are involved in their families finances and investing – a few even own businesses with their husbands or own a business of their own. In fact when we get together for lunch we talk about family, tennis, and stocks, seriously…stocks. But like so many other aspects of society women are becoming more involved and more equal. And, I believe, over time we’ll see a much higher percentage of women who have taken over the reigns on their finances and provide for themselves into old age.
Will be interested to follow the comments on this one. And Gail does indeed rock!
GRS seems to have an awful lot of women commenting, including me, and I know when TSD did his advertising survey it said the majority of his readership was female (although maybe that just means women are more likely to fill in surveys). And Ramit’s case studies seem to me to disproportionately feature women. So definitely a different audience, I think, on the moneyblogs to Motley Fool, which is great too. Sort of a weird time for women and finances now, we’re the majority of college graduates, have less (US) unemployment than men, etc. I would hope the days of husband doing all the financial planning and keeping wifey in the dark are gone for all but the most elderly couples at this point. Definitely my parents, teachers and peers expected me to be financially literate and responsible from an early age, and my female friends and colleagues have generally been pretty savvy savers/mortgage shoppers/etc and I’m in my thirties. Like KC above I run with a pretty yuppie crowd though.
I would imagine those younger than me are even better set.
Although I am a woman, I am totally “into” money, financial management, etc. In fact, I am working on become a CPA this year.
It has been my experience that what Robert is saying is right on. I have thought a lot about my future, and began investing when I was in college. I mostly owe this to my mother, who, although a boomer, was the person who handled the money in our family. However, this arrangement seems to be the exception, as far as my own personal anecdotal evidence is concerned.
Few (none?) of my female friends seem to have the slightest clue how to handle money or make investments. Although I am the go-to money person in my friend group, I wish there were some sort of lasting impression I could make on my friends about the importance of taking care of themselves financially. I have a long term dream of opening up a by women-for women financial advising office, since perhaps that would be less intimidating, and would get some women to think about their future.
But at this point, short of handing out books, pamphlets, and sending all my female friends this article, I’m not sure what to do.
Great post! But there’s one thing I would like to add. It’s true that women live longer than men, but life expectancy only tells half the story. If you look at health adjusted life expectancy instead, you see that women spend more years of their lives than men living with a chronic illness or disability.
In other words, longer lives don’t necessarily mean healthier lives. I’m trying to plan for that financially, as it may mean extra $$$ for health costs and keeping my career flexible enough to work part time before and after into retirement.
Thanks for touching upon this topic in such excellent detail. Hopefully a lot of women read it, and it prompts them to give some thought to their own future.
We women can sometimes feel that taking care of ourselves is selfish, but really, it may be one of the most loving things we can do for our families.
Imagine, if I plan my finances for old age, I am way less likely to be a financial burden to my children.
On the other hand, maybe I should be a burden to them (kidding.) I am going to send every woman I know of every age to this post.
We are never too young or too old to take hold of our fiscal life.
@ guinness416 — Right on! My parents raised me to have the skills and education to support myself no matter what my marital status. Good thing too — Despite my dream to marry right out of university have kids a few years later, life had other plans! 🙂
I thought this post presented some interesting ideas without being condescending or patronizing (which I’m seen in many articles on the topic). It’s tricky — I don’t want to be treated differently because I’m a woman, but on the other hand I can’t ignore the stats that aren’t working in my favour!
So how does a woman protect herself from falling behind if she stays home for a period and then gets divorced? I know too many women in that situation.They don’t have to stay home, I suppose.
Here’s hoping that it’s a passing generational thing. I’m doing my bit to make sure my kids know more about money than I did when I left the nest, both the boy and the girl.
I’ve noticed in my own family that most of the women of my generation (GenX) are more financially aware and responsible than then men — I guess we got the message that we need to do it for ourselves.
However, most of the women of my parents’ generation (WWII + Boomers) in the same family don’t have much of a clue when it comes to dealing with investments or long-term planning, although they can be very good with day-to-day expenses. I have the financial power-of-attorney for my parents (brother has health POA), and I’m pretty sure I’ll be taking over a lot of that responsibility if my father dies first. Mom is unfortunately afraid of all that stuff.
I really think the women growing up today are going to want to be involved in their finances a bit more than our mothers and grandmothers. At least, the women I know and hang around with are for some reason much more likely to be contributing to their 401(k)s in large amounts and concerned about their retirements than the guys. Anecdotal I guess, but I still think its changing for the better.
And men are closing the life expectancy gap, slowly but surely!
PS GAIL! I didn’t know she was on this site. Yay Canada!
I find this post interesting in timing especially since reports came out yesterday that in fact women who are married often are earning more than their spouses and are taking on more of an even split in financial decisions within the household.
Suzanne:
The simple answer is, “don’t get divorced.” Of course, what that really means is, make sure you marry the right person. Having kids just compounds the problem, so the full advice would be “don’t marry and have kids with the wrong person.” I think too many people are so eager to have the story book life, with the husband and the 2.5 kids, that they’re willing to overlook a few faults and rush into marriage. Of course, after a few years, those faults are no longer so easy to overlook, but by then, the damage is done. Kids have been born, careers have been sacrificed, and finances are hopelessly intertwined. It is the result of a series of bad choices.
With respect to the gender differences and money, I think the media plays a significant role. I think most financial information is geared toward men. Just look at the way financial shows are crafted on TV. Jim Cramer’s brash, over-the-top showmanship appeals to males. Sure, there are women on some financial shows, but they’re referred to derisively as “Money Honeys,” and their role is typically nothing more than acting as a moderator for a panel of more learned male guests, or reciting financial news off a teleprompter. They’re rarely solicited for their own useful insight. It’s no wonder women don’t watch the programs. It’s insulting.
Quick, name two well-known female money experts.
Suze Orman and Gail Vaz-Oxlade.
OK, name another one.
Uhm……
Exactly. Name some men.
Jim Cramer, Kevin O’Leary, Warren Buffet, John Bogle, Peter Lynch, William Bernstein, Burton Malkiel, Dave Ramsey, JD Roth, Trent Hamm, Ramit Sethi, Adam Baker, Robert Brokamp, ….
You get my point. The financial media targets men much more than women. Perhaps it’s easier to convince men to take risks with their money, whereas women are more conservative and risk-averse? Thus, television shows pitching the stock-of-the-week have better success appealing to men than women?
I am a professional woman who early retired at age 51. I have always been fascinated by money and manage our finances (I have to force my husband to look at quarterly statements). However, I have worked with many powerful at work “feminists” who foist off their financial responsibilities onto their husbands as soon as they get married if they can get away with it. Other women who are on their own or married in dire financial situations don’t want to know, because they know deep down if they look closely they will have to take action. The behaviors I see are either “I want my Prince Charming to take care of getting money, I spend it” or “I won’t have a bad financial situation unless I investigate and find out about it”. My fellow male engineers and I were always baffled by this behavior with money by otherwise ambitious and accomplished women.
http://www.nytimes.com/2006/01/01/fashion/sundaystyles/01LOVE.html?_r=1
Terrifying.
J.D., do you have any idea about the gender split for your readership is on this site?
Robert, the reasons you cite in your article are huge contributors to why I wanted to return to work. I stayed home for three years (most likely losing a lot in potential retirement), but staying home longer simply didn’t seem like an option. Although my husband and I are happy, I look at my parents — where my father retired early and took benefits early and then they split up and my mother will get basically no social security benefits due to working less while raising the children.
I hope that my personal commitment to educating myself about finances and retirement planning will not only help both me and my spouse in the future, but also help our marriage to be healthier and last longer. I also hope it will help my children to grow up with better planning and financial values than either my husband or I did.
It is so upsetting when I hear from people (like my brother-in-law) that he can’t do the basic math involved in balancing his checkbook. It seems like the least we should teach in school is basic addition and subtraction :-(.
I would like to see stats on the growing number of women that deviate from this. For instance, my fiance and I have discussed that if I were to get pregnant (heaven forbid), he would be the one to drop out of the workforce, not me. It took some time for him to warm up to the idea, given that he had been raised with the “women stay home and cook/clean/caretake” mentality, but that is not me. I’d be an awful SAHM. He’d be an excellent SAHD.
The “mommy gap” is easily solved if both parents are required to take time off for a child (and an equal amount). The mommy perception gap is sexism – “Oh, that female worker is worth less because she might take more care of the kids”. Sexism (and a big assumption.)
I read on cnn money yesterday that something like 22% of women outearn their husbands now. I think in 30 years the retirement picture for women will look very different. I’d be very interested in seeing a breakdown by age. Not that I’m saying we can afford to let older women suffer in the meantime.
As for social security and pensions… social security is very broken(a person who has never put money in gets money out when her husband dies, and the husband contributed no extra for this!), and pensions are going out of style.
Perhaps we need better 401k laws.
Along with the better parental leave laws.
This is great information. A real wakeup call for women (and married men) everywhere. Having said that, I find it offensive that this article almost admonishes women for staying at home (you are losing your potential retirement income!) and places way too much emphasis on social security. Like Geek said, it’s a broken system. I’m not counting on getting hardly anything back of what I have to put into it over my working career. I don’t think it’ll will last that long unless someone changes some major legislation. With that in mind, I avoid debt and save as much as possible in a 401(K) and Roth IRA. When I have kids, I will make the decision to stay at home and raise them based on what works for my family, not based on some fear of losing potential Social Security income down the road.
As a woman, I can say it wouldn’t occur to me to regularly read financial sites like Motley Fool, but I stop by GRS at least three times a week.
I’m the primary money manager in our household, but I don’t need or want the kind of in-depth investing advice some financial sites thrive on. I just want a steady diet of encouragement, suggestions and stories about what has worked for others.
Micro-managing finances isn’t for us. Good is just fine; we don’t need perfection. GRS suggests strategies to build wealth without getting bogged down in minutia.
Thanks for addressing this issue. It’s something I’ve been giving a great deal of thought to lately, especially as my husband and I consider whether we are ready to start a family. In our case, I am the money manager of the family, an arrangement my husband seems quite content with. He doesn’t have to worry about the bills, taxes, or investing unless he wants to. I basically have a handle on everything and feel that this will provide some balance to the relationship should I decide to take time off work to raise children. Then again, there are days I wish he would be more involved! But, mostly I’m happy that I can use my good math, planning, and strategy skills to build financial freedom for our family.
#7 Sarah and #11 JD — they’re studies done using the HRS, health and retirement survey. I believe they’re by Mitchell and Luzadis, though there are some other researchers at RAND and Michigan whose work has uncovered the same summary statistics in the same dataset.
Robert– if you like the BC CRR policy briefs, there are 3 RRCs (retirement research consortium). The other two are Michigan and NBER. The Michigan RRC is the one that has the working papers and briefs for financial literacy. They’re also connected with RAND, so you should be able to access RAND’s white papers through them from their working paper section.
Right now retirement saving is a really hot topic among retirement economists and there were several presentations at the ASSA (the big economics conference in January) trying to get at the “how to get people to save more for retirement” question. (With the exception of a small minority group that claims everyone is saving enough for retirement because we’re all rational.)
The thing is, though, although correlated with retirement wealth and entry into the stock market, financial literacy is unable to explain differences in retirement savings in randomized controlled trials. IQ is also correlated, but cannot explain once other controls are added. Risk aversion is also in the HRS but I’m not sure if anybody has looked at it, I presume so. We’re working on “patience” or “impulsiveness” or “marshmallow taking” as the new frontier but we’re not there yet.
I love that GRS is addressing this topic! If Robert or JD wants to do a column on the problems and benefits of work in older ages, shoot me an email.
@Geek,
It isn’t sexism. Most women I know WANT to be the one at home, and therefore are more likely to drop out of the workforce. I had this conversation with my manager after I had a child so he would know what to expect from me. He is very supportive of the choices I make, but if I choose not to put in the extra hours on a project like my peers do, then I don’t get as good of ratings, and therefore raises. Every manager I know is very careful to NOT assume a woman is going to take time for kids (especially since many don’t), but if you DO then it’s only right that your earnings are adjusted accordingly.
I agree with Kevin that it’s important to pick the right person. I would say the most important thing is picking someone that is willing to work with you through tough times and being willing to work yourself. I know so many people who gave up on their marriage because it was harder than they thought it was going to be. Ultimately divorce is financially devastating to both parties. Good luck getting rich is you walk away from a partnership with 40% of what you started (with 20% going to lawyers and lost in the shuffle of selling the house etc.)
This article doesn’t really apply to me. I have a better grasp on our finances than my husband does, if we ever DID get divorced, or if/when he dies I know how things would look and I’d be fine. Maybe not AS good, but I have the skills both professionally and financially to recover from just about any disaster.
The point to me isn’t necessarily that women are ignorant and make bad choices, but it looks like on average they are more ignorant and make worse choices than men. Most people I know IRL don’t understand and respect money like most people here at GRS. And they make stupid choices with the money they have. So I have a hard time getting worked up that members of my sex have their heads even deeper in the sand.
Ah man, Allison #10 beat me to the link. Here’s one of their papers: http://ideas.repec.org/p/crp/wpaper/72.html
Although older women are more likely to be poor, I think they are also more likely to know how to live on a budget …
@ Shara — Yes, it’s sexism. You’ve already got the job and the family. If you’re trying to get a job or interview for a better position with another company, that’s another story! When managers assume that women aren’t going to be as valuable employees because they’re focused on their family, then that hurts all women. Especially those of us who are single! Why should I be judged based on another woman’s performance?
Many men I know have stayed home with their kids, and I think that’s fantastic. However, many middle-aged employers aren’t that forward thinking — yet. When they look at a male employee and wondering how his performance and time off will be affected by having kids, then I think we’ll be closer to equality.
The article says”[women] should consider retiring later”. The reason that women retire at the same time their husbands do should be obvious — a single retired spouse largely defeats the purpose. You can’t go travel across the country or move to Florida if your spouse is still working. What’s a man supposed to do for 3-5 years while his wife is still working? So couples retire at the same time.
My wife is 30 and doesn’t work. She volunteers at a nature reserve and helps out her elderly father. I’m the sole breadwinner in our household. Your advice about when to retire (or not) just doesn’t seem to apply.
@guinees416 and geek, it’s funny to me that you think younger women have an advantage. I think people like me raised during the feminist movement in the 1970s have an advantage because we’ve been trained to realize we’re equal in a way that has not trickled down as well as I’d like. For example, I expect women to ask men out the same percentage of time that men ask women out. (Whoever’s less chicken would do it first, right?) But while my generation approached that, the one after mine didn’t.
Probably being single and childless helped me, too. Having a typical crappy female-friendly job (low pay but good benefits, few layoffs, and a good pension) didn’t help me.
@TosaJen, my mother used to be stereotypical (at least she was good at frugality), but when my dad started his own business, she got a job just to reduce the stress of having an unstable income. Basically, an ulcer motivated her to learn about money. Now she’s collecting Social Security but also working half-time so she can keep growing her pension.
@Beth, I did feel that this article was a little condescending, but I could tell the writer meant
well and tried to stick to facts. But should it seem shocking that yesterday I got a (totally clueless) (male) coworker up to speed on his non-pension options?
I’m not following all his advice either:
* take control — yes
* consider retiring later — no way; I’m retiring at 52 unless I can figure out how to do it sooner; I don’t count on Social Security except to help me deal with inflation in my later years.
* have both spouses involved — sort of–each of us does focus on what we’re best at and most enjoy. I open all the junk mail to make sure it’s really junk. He finds the best deals on good internet service. We each invest separately because we have different philosophies.
* have the husband consider retiring later — no way
What I did was:
* contribute to an IRA even though I also have a pension
* realize taxes are only going up for me (my salary has much more room to go up than down; income tax rates are at historic lows), so go with the Roth
* don’t quit a job until I have another lined up
* develop my investment strategy over time (so my worst mistakes happened when I had the least money to lose)
* buy a house when I could even though I was still single and might at any time marry someone with a better house–I made sure it was in a good location to rent out if that happened.
* pay off my house before retiring — I will do this at age 50 if not earlier, after up to 17 years of mortgage payments.
* find good ways to save money — I buy old cars but only reliable models, I generally have a roommate, I take a bus to work, I shop at thrift stores, and I keep an eye out for healthy but yummy recipes using affordable ingredients
* don’t be afraid to spend — I travel, occasionally see live performances, and pay for dance lessons and other fun classes
* quit paying for more degrees that I’m not going to use!
@Suzanne, that is a really good question. Staying at home only works when you’re part of a team, and when that team disintegrates, you’re in trouble. I’ve also known people who put their spouses through school and then got ended up divorced before it was their turn to go to school and/or share in the new higher income — at least they were contributing to Social Security.
@Kevin, I mostly don’t care who the media are targeting. I’ve found that financial information targeted to others is often relevant to me, and I enjoy seeing different perspectives. I’ve read things for rich white guys, poor black gals, and everything in between. The one thing that does bug me about virtually all the sources I see online (at least on paying off debt, saving, and investing) are targeted to people in the 28% tax bracket. Let’s just say that maxing out all your retirement vehicles (say 15K in the 401K plus 5K in an IRA) is not even possible for some people even if they could save their entire take-home pay!
A good post that raises some interesting points, but I don’t think we can safely assume that Social Security in 30 or 40 years is going to look like anything like the Social Security that retirees have today. Probably the retirement age will be raised to at least 75 by the time that I retire, if nothing else.
I think this is a strongly generational issue. I’m not sure where the cutoff is, but I’m 40 and what I have seen is that for my age and younger, women are far more concerned about financies and planning for the future than men.
This might be related to the issues you quote. Generally speaking, the men I know are more confident in their ability to earn more in a pinch (construction workers earn more than nannies), and also to get by with less. (Guys consider living in their car a pain in the butt – women, a nightmare.)
Woman my age tend to be very concerned about preparing and planning ahead for the possibilities of divorce, single parenting, long retirement, disability, etc. I hear about men my age having only two big financial worries – expensive divorces and high child-support payments. Neither of those problems are best prevented through economic behavior. It mostly makes them more cautious about who they date.
Whereas, a lot of the women my age & younger that I know date basically whoever, but are extremely careful to think ahead about education, career choice, savings, divorce laws in their state, etc.
One huge factor is that *many* women of my generation were raised by single moms who did not get any child support; so they are very aware of what can happen. Women of older generations were raised *expecting* that men would take care of them. Women of my generation may *hope* men will take care us, and love watching the rom-coms where some rich guy makes all our heroine’s problems go away — but we sure don’t expect it!
Funny, my husband reads Motley Fool and I read GRS. 😀
I pay most bills and do the taxes. I invest in my own retirement accounts and he dabbles in stocks. He’s older than me so I do expect to outlive him, possibly by quite a bit. He has no savings and a spotty work history, so I doubt he’ll have much to leave behind. I focus on my retirement because I expect to live a long time; I don’t expect to be able to count on Social Security; and if my husband has expensive health problems late in life, my retirement accounts are protected assets. I do my best to take care of “us” but the truth is there is only one person to take care of “me” and that’s me.
I agree with Mel #29, this is the kind of advice/encouragement I am looking for, not stock advice (most of the time!)
I really enjoyed and learned a lot from David Bach’s Smart Women Finish Rich. I felt a little silly reading it at first, but he won me over with his sincerity, thoroughness, and readability. So it doesn’t ALL have to come from female financial gurus 🙂
And it’s still applicable to men, too, in most cases – he implicitly makes a strong argument for couples to be equally involved and educated about their finances, particularly for the “what if” situations.
Great post and very much on the target.
I agree with Robert about men being more interested and involved in investing their money. I have been a member of the American Association for Individual Investors (AAII) for over 10 years. It is depressing to go to presentations with 50 – 60 audience members and see only 5 or 6 women in attendance.
S.E. #14 Just like S.E., I was the go-to person when I was in the corporate world as an Accounting Manager. Many friends and colleagues would seek out my advice on what to invest in their 401(k) plans and how should they plan for the future.
That experience helped me decide to open a business to address this issue: Women are less comfortable making financial decisions, especially when they are on their own. However, I am finding that many of my clients are couples. In some cases, the woman is expected to handle the household finances, in addition to everything else she is handling (i.e. kids, work, grocery shopping.) It is interesting that all contact from even couples has come from the wife and not the husband.
Finally, Kevin #22
Financial female maven: Diane Nissen Friedman
Yes, that’s me. I have a lot of friends who keep telling me to write a book and get on the speaking circuit.
I manage our investments, my husband pays the bills. I enjoy planning our investments, and appreciate the sense of security I get from knowing how much we are saving.
The whole discussion of retirement, especially as it intersects with the ideas of caregiving (children and other family members), scares me. A lot. I think we as a society really need to decide how we want to value caregiving. Is it “work” if a nanny/daycare/nursing home employee does it, but not if I do it for my own family members? (How inefficient is it is we all hire someone else to care for our family members?) As someone mentioned before, a marriage is about making the best decisions for a TEAM, but if that team falls apart, suddenly retirement turns into a “every person for him/herself” event. Marrying wisely is good, but, please remember that people change, addictions develop, mental illness appears, and what was a good decision based on all the available facts at 25 may not result in a good outcome at 35 or 35 or 65.
I would like to see a whole post aimed at people who are stay at home parents, discussing what financial decisions we can make to protect ourselves. I’d also like to see some discussion of policy based solution – 401k’s for caregivers (so I can save more than $4000 /yr in my spousal IRA)? Or just increasing the limits of IRAs? Allowing caregiving years to count toward social security?
Hmm. I am apparently not a “typical” woman. Surprise, surprise….
– I read Motley Fool as well as GRS. One is for specific advice on investing, the other is for encouragement and mind-set.
– I do the bills, the taxes, the investing, the refinancing and financial planning for both of us.
– I was the one who applied for the SBA loan that allowed DH to buy his own business 10 years ago.
– I have far more in retirement assets than he does; I started at 25, he started at 32 on my insistence.
– My brother is a high-net-worth advisor at a large financial company, and I am more financially successful (and almost as educated) than he is in these matters (and he’s the first to admit it).
– For the commenter who wants to encourage her friends to get savvy, I’ve been known to forward URLs (like this one) and recommend books for them to read. My favorite: Jane Bryant Quinn’s Making the Most of Your Money.
– For those who wanted other female finance writers: JBQ, as noted above; Jean Chatzky is good; Liz Pulliam Weston on MSNMoney is capable…they are out there, if you read a lot.
I should also add that, in preparation of giving myself the option of being a stay at home mom, I spent my 20’s working in a high-starting-salary field (engineering), and stuffed as much in retirement accounts and after tax accounts as possible. If I stay married we should be able to live a very luxurious retirement. If we divorce, I’d have to get myself retrained in a new field (engineering is hard to go back to after a few years break) and scramble until I can start tapping into those retirement accounts. I would be ok, I think, but the whole thing seems a little inefficient.
The Dave Ramsey people say that the majority of the people they get in their classes are women. And with the couples they say it is mostly wives bringing their husbands.
Back before fool.com branched out to specific stock investing, I got a lot of information there. Now I only turn to it when looking for that article on how to buy a car with a fax machine/email when someone I know is about to buy a new car. According to the O’Dean article on gender differences in stock investing, women are much more likely to pick an index fund and hold on to it, just like the original motley fool recommended doing. Men are more likely to trade often in an attempt to beat the market, so they are interested in getting information on new stock picks. It makes sense then that regular readers would be skewed towards men.
(Men do worse than women who invest in the stock market on average because it costs money to trade stocks, so they have more transaction costs, not because they’re necessarily worse at picking stocks on average.)
MSNMoney also has the Women in Red column with MP Dunleavy and Donna Freedman (who I know reads GRS).
It is interesting that people have noted that there may be cohort (generational) differences in the financial literacy gap. The HRS only looks at people who are relatively close to retirement age (though spouses in the HRS may be younger) and does not really study 20 and 30 somethings. It could very well be that this literacy gap is closing along with the education gap. We really don’t know. There aren’t any large scale datasets that combine these questions. Heck, there aren’t many large scale datasets that have decent measures of wealth or net worth. Even wages can be difficult to get at.
These statistics are sobering. I need to re-evaluate my family’s plan. I want my stay at home (working) wife to be in the best position possible.
Great post!
I’m a woman, the primary (soon to be sole) breadwinner of our two-person household and the manager of our finances. I also read GRS nigh-daily, and I don’t think this is a coincidence. JD’s accessible writing style helped get me interested in getting our finances straightened out. I don’t think he appealed to me as a woman, he appealed to me as a person in debt who didn’t know much about money management. I think this is why this site has such a broad range of readers/commenters… both men and women.
As a Chartered Accountant I get the women coming in – in thier late 30’s or early 40’s to tell me that they are thinking about divorcing thier spouse, but: the house is in his name, the cars (all of them) are in his name, the bank account is joint, the credit cards (all of them) are in his name… etc. etc. etc.
I understand it somewhat when a lady in her 60’s comes in and tells me that, but someone in her 30’s??
I don’t have time to read all the comments so forgive me if what I say is repetative.
Roberts statistics are sound. I address this topic when I do personal finance workshops for elementary teachers (of which about 85% of the workforce is made up of) This is what I tell them.
1. Make sure you are aware of all investments and accounts and how they are titled and who the beneficiaries are. If he won’t discuss this or tell you where they are there are some serious trust issues.
2. If income needs to be replaced by one spouse you must have life insurance on that person. If you are dependent on both incomes in a relationship then both people need to have life insurance. Life insurance is an income replacement tool, not an investment tool.
3. Even if one spouse doens’t work they can still make contributions to an IRA or a Roth (up to certain income limits depending on how you file) Contribute to a retirement account for a non-working spouse if possible.
I think we need to differentiate between websites/blogs that focus on money management/budget i.e. money basics and investing websites. A lot of the investing websites like Motley Fool and Seeking Alpha are read by short-sellers. Who is more likely to short sell? I think the study JD referenced is the one that shows that women trade less than men, so they are probably not shorting or trying to jump on the latest investment bandwagon. Sorry to stereotype, guys. I know there are a lot of long-term male investors as well.
Women have traditionally run the family budget/household and I would bet are more comfortable doing debt/money mgt. than investing, which accounts for the difference in readership on personal finance versus investing websites.
This sort of information never fails to shock and scare me. Things like women earning less than men do in the work force is something I keep expecting to stop being true and yet there it is again.
It’s true, we have to take control of our own finances, whether we be single or not. My mom is a baby-boomer, divorced, dealing with medical issues and at the moment there’s not much I can do to help (having been laid off myself last year) and struggling to live on Social Security.
A few years ago I started a retirement plan and every year I’m more and more happy that I did. Still single myself, I have no intention of ending up in my mom’s shoes (and neither does she).
Thanks for the great info!
A young feminist, this article is spot on. Part of my job is to teach volunteers how to file taxes for low-income residents in our area. I had one woman in my class last week who, when discussing filing statuses, threw up her hands and said, “I don’t know any of this–my husband has always done the taxes in our house!”
At that moment I decided that I must take control of my financial future. I can’t rely on everyone else to make decisions that are best for me; I need to be the one calling the shots. I need to educate myself and invest wisely.
One thing I strongly believe is that the years women take off to raise their children should be counted toward Social Security in a positive way. Raising the country’s next generation of scientists, doctors, politicians, teachers, workers, etc. is a huge task and it should be respected as such. By compensating women for taking time off from their careers to care for relatives and children, our country would show that we value the work and investment many women put into caring for family. Until then, I can only surmise that our society does not take motherhood very seriously and it makes me question how I will be able to balance a family and my job without missing out on either.
@ Jay, I’m in my 30s and out of my college group (women) who have children only one works full time, one is part time and the rest are SAHM (none of the kids are babies, all 4+ at this point).
Early on in my career, one of my co-workers’ husband died from a rare illness. At the time she was on a reduced schedule at work, he worked full time in a well paying profession, they had two kids. The husband died within 6 months. When I got married a couple of years ago, she told me, always keep working in your chosen field you never know what is going to happen. She also told me to make sure we had good term life insurance as they didn’t have it and he couldn’t qualify once he got sick. She was left with a huge mortgage on a house that she can’t think of selling because they designed it together.
Ugh! Why did you send me on the “free download” goose chase – it’s clearly from a year ago and no longer available. Time suck!
I’m not sure where anyone got the idea that being helpless about finances was cute or sexy, or that it is acceptable for an able-bodied adult to not work when the opportunity presents itself. The old model of the “kept” wife was built on a system of dowries. She brought money and/or property to the union, plus she managed the household. And that used to be a LOT of work. Now, let’s face it, it really isn’t.
Re: why the gender gap: people just don’t want to DEAL with stuff. This would be why so many men don’t go to see a doctor until after their first heart attack. … Many women – myself included – feel like we are the ones taking care of business, making sure our relationships stay on track, managing a couple’s social life, keeping in touch with our families, making sure the home looks decent, if there are kids we’re doing 75% of that work; maybe women feel like managing the money, on top of everything else, is just too much to ask.
However, I’m with E #40 … very similar situations and viewpoints. Girls have GOT to accept that, like Smokey the Bear says, only YOU can prevent [financial] fires.
“I’m not sure where anyone got the idea that … it is acceptable for an able-bodied adult to not work when the opportunity presents itself.”
I’m not sure where anyone got the idea that all able-bodied people need to be working all the time, or that they get to determine what is an acceptable or unacceptable level of work for someone else, not dependent upon them, to be doing.
“Many women … feel like we are the ones taking care of business…”
Many men feel the same way. Most people *feel* like they’re doing a lot of work because they experience every detail of the work they do themselves, but only the final result of the work that others do.
@ Beth
“Yes, it’s sexism. You’ve already got the job and the family. If you’re trying to get a job or interview for a better position with another company, that’s another story! When managers assume that women aren’t going to be as valuable employees because they’re focused on their family, then that hurts all women. Especially those of us who are single! Why should I be judged based on another woman’s performance?”
And where did I say any of that? What I said is it isn’t sexism when a woman gets less compensation after she has re-prioritized her life away from work. Equal pay for equal work. Not equal pay for less work. If I apply for another job I will be honest about what I’m willing to do just as I expect the manager to be honest about what is expected of me. If I meet the demands I expect the same wage as a man. If the requirements are lowered due to my personal situation then I expect less pay because the value being delivered is less. Anything else is ridiculous and dishonest.
My husband and I work for the same company. Though we have virtually identical educational and professional background my base pay is higher (likely partially due to me being a woman and the perpetual line about how women make less, and I make their statistics better), but last year he earned more than I did because he was available for more OT. I brought home 95% of what he did due to not adding as much value.
The other point I made is the managers I know are very conscious of the fact that they can’t make assumptions. It’s illegal and they don’t want anything even SEEMING inappropriate. In fact the honest ones have told me that I have a lot more room to play the system because they CAN’T take things like time off work due to pregnancy into account. Some still likely do, but of all the managers I know most err on the side of caution and women.
@ Tyler
I absolutely agree on both points.
Shara– Beth is making an argument about statistical discrimination. She’s saying that other women’s choices are causing employers to discriminate against her. Employers compensate her less on average because they can’t tell if she’s the kind of woman who will leave work or the kind that will stay, so they assign a higher probability to her leaving than they would a man. It’s discrimination against women who do equal work because employers believe on average than a woman will be more likely to leave.
Yes, hiring managers go through a lot of training to not make those kinds of assumptions, but they still discriminate in audit tests. Neumark et al. on hiring in restaurants is the most cited audit study on hiring of women. There are a ton on race including the recent Bertrand and Mullainathan, and a really neat natural experiment by Autor shows that when a race-blind hiring test is implemented the characteristics of the minorities hired changes even though the percent minority stays the same (a kind of proof that there had been statistical discrimination at that company, since SD predicts that hiring managers will get it right on average even if they pick the wrong individuals). Lahey does an audit on age and hiring. Rooth has one on obesity (which isn’t illegal to discriminate against in most states). Hiring managers also do badly on implicit association tests.
(And technically, men are equally as likely to leave any given company as women are… they just leave to work for a competitor rather than leaving to stay with the family, but employers remember the woman leaving after maternity leave more than the man leaving for a better job offer. I believe the citation for that is in the Economics of Women, Men and Work textbook by Blau, Ferber and Winkler.)
@ Shara — OH!!! I think you and I are reading the situation differently. I do agree that people deserve raises and advancement based on their performance, not assumptions.
Nicole’s right though — women are up against a lot of workplace baggage. I think I had an easier time escaping discrimination when I was younger. Now that I’m over 30, I feel like people are expecting me to get married and get pregnant at any minute! Employers can’t legally ask about that — but the “where do you see yourself in five years” question is a hard one to answer!
I think the point : “Among single women 65 and older, 28.2% are considered poor or near poor, compared with 22.7% for non-married men and 8.1% for married people in the same age group.” really sums up the situation. That is pretty clear : a much higher % of women have ended up in poverty at retirement.
But I do think (hope) things are improving. A much higher % of women are in the workforce now. Consider this, right now 57% of college students are women and women generally do better in college. That situation should be beneficial for the finances of women in the future.
How can you not realize that to characterize women as the better-smelling sex is demeaning? Is that really the most important aspect of women that you can come up with? Why generalize us at all? Why not just say, “I hope that you don’t find the facts I just mentioned demeaning to women.” Instead I’ve become so distracted by your ignorant generalization that I didn’t bother to read what you wrote about. I skimmed it, though and as I am the money manager in my household, I decided that I didn’t need advice from a guy that thinks it is notable that women smell good.
(Okay, I wouldn’t normally to blow it all out of proportion, but I think it is really important for you to realize what kind of effect an offhand remark like that can have).
An interesting fact to note is that only 25% of Americans between the ages of 21 and 44 have a degree and 50% of that same age group have taken college courses (US Census 2000). Shocking, but true.
This website, and I’m assuming most financial websites, has a readership that is made up mostly of college graduates. So while it’s true to say that the gender gap may be decreasing because the younger generation is better educated, we’re only talking about a small percentage of the population. College eduated women (and men) are a minority. We may have all our ducks in a row, but my concern is for the majority of women in that age group who are more likely to come across hard times and not have a degree to fall back on.
I’m not saying you can’t make a living without a degree because clearly people do. It just seems a whole lot harder!
I’m not sure if anyone else commented on this (don’t have time to read everything), but I noticed that while Robert commented on the lost income from years off for caregiving, he didn’t comment on the career effects. For some this may be negligible, but I know for me it has been profound. I work as a math researcher, and I took one year off work for each of my two pregnancies, with 1 year working in between. So I was off for 2 years out of 3. Due to our VERY generous mat leave provisions, I was earning very nearly the same income, so I lost very little money, but it has slowed down my career progression substantially. I would estimate that between the actual time off plus the time spent rebuilding lost skills and knowledge (because seriously, who has time to read research papers when you’re taking care of a crying baby all night?) I have made no career progress over the last 5 years. I’m basically right where I was before the leave and finally starting to progress beyond that point. While it’s very hard to quantify the financial impact of it, it can’t be ignored.
The Social Security system DOES reward women for taking care of children in the sense that a woman can receive a Social Security benefit equal to 1/2 of her husband’s benefit, even if she has not worked a day in her life. Thus the system transfers money from married couples with 2 earners to married couples with only 1 earner. I don’t have a problem with this except in the case of wealthy retirees; the spousal benefit should definitely be means-tested, in my opinion.
I have been thinking about this since it posted, and I am still having a hard time working up a give a damn for two reasons:
People are more than statistics. We all know what we should do, and these numbers can show trends, but there are so many dynamics involved that I am a little dubious of any conclusions (such as ‘we need women oriented investment advice’).
And as far as the conclusions about retiring later/working longer: your financial picture is the sum of your financial decisions over the course of your life. Did you go to college? Did you start saving for retirement in your 20s? Some divorced women who worked very little have better retirement than those that worked their whole lives because they were smarter with the money as a couple, not because they earned more or necessarily retired later.
I make decisions based on my specific situation and it has nothing to do with being a woman.
Am I the only one that feels this article was rather pointless?
“Women make less.”
“If you don’t have enough money to retire, work a few more years.”
That about sums it up for me.
This is something I think a lot of older women are having trouble with. My grandmother, for example, was recently faced with balancing the checkbook and my grandfather’s estate following his passing. It is important for more women to take an active role in the family finances so there is not only a common goal, but also direction should one of them be unable to carry on.
@Shara – The perception mommy gap is sexism. A coworker perceiving you as likely to take more time off because you have female bits = sexism. (Assuming something about you based on your gender). I’m lucky to be in a workplace where the men seem to take tons of time off for their kids since their wives/partners work. The partners, I’m sure, take some time as well.
As for women wanting to be the one at home… we often think we want what people expect of us.
@Debbie M
” it’s funny to me that you think younger women have an advantage. I think people like me raised during the feminist movement in the 1970s have an advantage because…”
Kids these days, they just don’t try as hard anymore, they take all our hard work for granted! To see some lively 20-35’s chatting it up about feminism, start at feministing.com. There’s some good reading on 2nd vs. 3rd wave feminism somewhere up there… and all of the generational fighting and finger-pointing that we need to STOP. Our overall fight is the same. If you’d like to change the focus of feminism today, then get active!
@guinness416 – completely agree.
That’s not to say that the “trained to ask guys out” 1970s feminists have a pass to stop fighting the good fight though. Nor us in the younger generation.
You hit a nerve.
I have been working on a blog for my age group (50 Yr old) women. Most of my friends left the workplace for at least five to ten years while raising children. They are now working hard to catch up. None regret their choice.
I was lucky to have a female financial advisor when I was thirty. She was newly divorced and lead me through lots of great investments. It was those choices that gave us the lifestyle we have today.
I have always been the planner and investor. I hate that I will have to work for ten more years to really catch up- but those are the breaks. He gets to play in the barn- I get to go to school. Life could be worse.
@Shara – just caught up on the “work less” part. That isn’t discrimination, except workplaces that don’t allow for having kids suck! 🙂
I read just yesterday in a newspaper article that there was a US study that showed that women in their 30s and younger are more likely to have a degree and usually a better degree than their husbands/partners and therefore getting higher paid jobs. In the 1970s it was the other way around. I think as more women in the workforce get higher paid jobs, they are naturally going to learn more about money and become more financially savvy. Most will still probably end up dropping out of the workforce temporarily to have kids but I think women are becoming smarter with the financial side of things.
Jay @49, I don’t know what state you live in, but in most it doesn’t matter whose name is on the title. Marital property is shared.
Debbie @37, being single and childless is probably the best thing you can do for your career, sadly. (I don’t mean that it is sad to be single, childless or both; only that these choices affect women in a way they don’t affect men.)
Interesting article. I don’t disagree with a lot of the information you present, however I have to wonder if this trend is changing. I know many people in my generation are much more aware of their finances. There was an interesting article in the New York Times today about how more and more men are marrying wealthier women. The trend seems to be heading in the reverse – more women are graduating college or higher education, taking higher paying jobs, and building a higher net worth.
I can’t wait to go through all of these comments (don’t have time now, but such a great topic!)
As the primary breadwinner for our family, I think it is important for stay-at-home MEN to consider several of the points as well — my husband has a hard enough time dealing with being a “trophy husband” but it also definitely puts him at an economic disadvantage (i.e. no access to a 401K etc.).
This is something that as a woman hell-bent on protecting myself and being self-supporting, I had a hard time understanding at first. Now I realize that all the reasons I am so driven not to have to rely on anyone — are the same reasons I have to ensure my husband doesn’t face the same pitfalls. Not just because he’s my husband and I love him, but because he has made sacrifices for us to be successful as a family.
I love my kids but I’m petrified of staying home for any length of time. As an engineer, I’m worried about my skills going out of date and not being able to re-enter the workforce at the same level and/or pay.
So, yes, I think the earnings gap is real..because time off can be a real negative. And you also can be put on the mommy track whether you want it or not. Some people just assume you don’t want to travel anymore or whatnot because you have kids…even if you never said that yourself.
There’s no crystal ball that tells you what the future has in store for you. You may end up needing to be the bread winner for many reasons (not just divorce). I want to make sure I can always take care of my family if I need to.
I disagree with Sam’s (#1) statement that women don’t think about the what-ifs. I think that instead they are willing to sacrifice for the good of their family –to their own long-term detriment.
Even though I write about personal finance, Mel (#29) stated exactly how I feel. My eyes glaze ove when I encounter posts about EFTs and buying gold. However, I do have a 401K and am on the road to a comfortable retirmeent.
I got divorced at 33. While a shock to my system it made me realize that “happily ever after” may not be an option. I turned to Suze Orman’s “Nine Steps of Financial Freedom” and put 15% of my pretax income into retirement. I figured out how to buy a condo. Basically, I took care of myself not knowing what the future would be. Also read the Motley Fool.
I remarried seven years later. My DH has different investment outlooks than I but we will probably be okay in retirment–he invests in real estate and me in the stock market. While we are still paying over $1100 a month toward alimony and child support, we are making progress on our own financial picture.
Bottom line: it’s never going to be perfect but you need to be responsible for yourself and for those with whom you have become involved.
@ Shara — Good point! I think there’s as much diversity within a group (like women) as there is between groups (between women and men). Rather than dwelling on the differences, I think we can look at the stats and think “well, this is one factor that I may or may not have to consider”. A lot is going to change in 30 or 40 years. (By then, life expectancy could be well into the 100s, so how many of us will truly be ready?)
@ Bucksome — One year at RRSP season I was chatting with married friends about how hard it is to financially plan when you don’t know what the future holds (i.e. Do I keep planning as if I’m always going to be single?) They laughed at me and said even though they were married they were still funding their own retirement because “you never know what will happen”. That really put things in perspective.
I couldn’t help but notice that this post and the comments are severely lacking in one thing: an analysis of the significant and overwhelming role of sexism and its impact on women’s overall relationship with money. A lot of things mentioned as disturbing “facts and stats” of women and money is really just the effects of sexism and it needs to be called that. The word “sexism” or “inequality” was not mentioned once in this post and that is a disservice to a more complex understanding of the issue in my opinion. Some of the tips were certainly useful, but a lot was left out.
The unequal division of labor at home, unequal pay for the same work, sexual harassment at work, the restrictive gender roles that still permeate our culture (man makes the money, woman stays home with the kids), women’s limited earning potential because of the feminization of labor, restrictive family leave policies, lack of affordable childcare, sexism and racism in the hiring process and promotions, devaluation of work primarily done by women, flat out unpaid labor of mothers everywhere. This all contributes to those stats. And some women don’t have a choice about whether to “put their careers on hold to raise a family” It is just expected of them. Also, what about some stats and info about the experiences and challenges faced by women of color? Often they are experiencing racism AND sexism in the workplace and in society.
I would also add to the “What’s a Woman To Do” Section:
*support women’s equality
*speak out against sexism in all its forms
*donate time, money, or volunteer for groups that fight against discrimination in the workplace
*write your legislators and support legislation that works on better childcare policies or closing the pay gap
Also, men directly benefit from our society’s continued reliance and promotion of sexism. It is unearned privilege. Men benefit financially and in their careers when their wives stay home with the kids, they benefit from the second shift of housework and childcare responsibilities that often fall to women. Where is the “What Can Men Do” Section?
mythago @ 73 – I’m Canadian, and we too are a shared property jurisdiction.
BUT the credit card company doesn’t care if you just got divorced and you were on your husband’s credit card for 20 years… they want to know what YOUR credit is like. So does the mortgage company when you go to buy your new house.
The utility companys here also won’t hook up a new property without a credit check or a large cash deposit.
You need a bank account in your own name so that the other spouse doesn’t have signing authority on it and can’t drain it dry the day you (or he) says the marriage is over.
If “your” car is in his name, you can’t sell it to pay your first months rent when you leave… or to pay the mortgage while you wait for the life insurance to come in after he died suddenly.
Legally you are correct, practically you are wrong.
(all examples from clients or clients of my associates)
I think the moral of the story is that we need to provide more financial education for women and bring them into the mainstream of the conversation. We all know that the financial industry is predominately male, but I think that the more financial professionals who are proactively creating opportunities for women to get involved the better off we all will be.
If we want to change the statistics we have to do something different to bring more women in the loop. Obviously the women who comment on this site are, for the most part, already taking an interest in the financial area of their lives, but the vast majority of women in the US are too scared, intimidated, or overwhelmed to take action and get involved. 58% of baby boomer women have less than $10,000 in retirement… that is something that will only change if we can build awareness for women across the board.
Gail Vaz Oxlade reads this site? OMG OMG OMG!
I like her message a lot more than the NYT article that was linked earlier, and I’m not just saying that because I’m a Till Debt Do Us Part fanboi. The NYT article seemed to focus on how her ex-husband did this to her. She mentions in passing that she wishes she’d focused on her own education more, but ends talking about how many other women are “discarded” by their husbands, as if divorce is a one-way street. She mentions having to make mortgage payments, which implies she got the house.
The problem isn’t the divorce, let alone whose “fault” it was. The problem is women being utterly dependent on their husbands. Like Gail says, it’s the Prince Charming syndrom. Marrying a man with a good job is not a career plan. It’s not even a financial issue, it’s an issue of unrealistic expectations. The sentiment seems to be “I don’t have to do anything I don’t want to, my husband will take care of that.”
This post started out very promising and set the stage for thoughtful, insightful dialogue about a very important issue, Women & Retirement. The ending was disappointing primarily because the solutions were Social Security oriented and devalue the role of women as a nurturer and caregiver to children and the elderly (parents). It’s common knowledge that the Social Security system is hemorrhaging in its current state and is not sustainable. To advise people to make choices with the intent to get more Social Security is folly. Responsible retirement advice would mean that any Social Security disbursement would be merely gravy. Advising people to work longer misses the point of fiscal responsibility and being savvy. Money is a tool and should enable you to create the life you want, early retirement, staying at home with the children, assisting sick parents. The disparity in maternity and paternity policy is worth mentioning as well, there is a tendency for men to take off to “coo” the baby and women take off to care for the child and nurture it often with long-term consequences to her career. Also, if a man is a high earner and the wife makes the decision to stay home, her sacrifice should be honored with a spousal IRA. Last point – the personal finance blogosphere and investment industry can be very elitist and make women who are novices feel like they can never understand their money or have a good retirement if they do not appreciate the nuances of options, futures, trading etc. The reality is you can become wealthy investing in large caps, no load mutual funds, and index funds. The people who thought they knew it all were at the helm of this nation’s economy when we entered the deep recession.
I reacted very strongly to reading this post. Not that I did not already know a lot of the information presented, but I have been thinking about taking time off from work to finish my degree this year.
I have been saving for my retirement (through work and an IRA) since 2002, have a mutual fund and savings accounts, and have owned a house for over five years. I started when my mom sent my sister and me an invite to have lunch with her financial adviser and other women investors. Only when we got there did we realize it was intended for women who were recently divorced or widowed. These women were so happy to see us – both in our early twenties and thinking about planning for the future – and it was an eye opener to hear about their challenges. I started my IRA and a mutual fund soon after, and have participated in my company’s retirement plan since as long as I have been eligible. I started the paperwork to max my IRA contribution for last year and this year after reading through this post and the comments.
So, I worry about taking time off to finish my degree, although I think its an investment I can make (and have the resources with my partner to do so), and it would open a lot of doors for me when I finish, although we plan to think about starting a family soon after so it may be a few years before I am back full time in the workforce. I don’t think I will need to take loans to do so.
Has anyone done this and have any advice for me?
@ Tracy — I’d love to see your questions answered in a “Ask the readers” post (hint HINT J.D.!)
I went back to school to do a graduate degree, and sometimes worry about the time I missed in the workforce. However, besides the skills I learned, I also made great contacts, volunteered and worked to build my resume.
On the other hand, friends of mine who did their degrees and then immediately had kids lost this important momentum. It’s hard to get into the workforce even at the best of times, so it’s important to bridge the mommy gap with part time or freelance work in your field.
Best wishes, no matter what you do!
Tracy– What is your degree in? Will it be something that will increase your: 1. happiness/job satisfaction, 2. income, 3. Employability, 4. Future earnings potential (meaning it opens up new promotions in the future that you could not get without the degree)? If any of those, then do it! #1 is most important, assuming that it meshes with #3.
If you’re talking about getting an English PhD, then do look at the employment and income stats for people with those degrees, especially from the schools you’re applying to. You may end up with your dream tenure track job but more likely you’ll have to adjunct a few years at little pay before landing a tenure track job in a place you may or may not want to live. In many sciences it’s the same thing but with a post-doc instead of adjuncting. You’ll have to think about whether or not the time spent doing it is worthwhile. A lot of people get those degrees and give up on the main goal after a while because there just aren’t enough jobs to meet demand, and regret the time spent. Some people don’t get the t-t job and move on but don’t regret the time spent because they enjoyed schooling.
Generally the advice is to start the family during or before getting the additional education if you’re planning on leaving the labor force to do so. (If you’re not leaving the labor force, then there’s no optimal time to have kids.) That way your new learning isn’t out of date when you want to get into the job market. You’re more attractive to employers with a new degree than with a degree that’s a few years old and no job experience in that field. Employers prefer the story, “She was out of the labor force taking care of children and now she’s going to be in it full time as evidenced by her commitment shown in getting this new degree” over “She went through the effort to get the new degree but did not want to (did she actually enjoy the field?) or was unable to use it (did no one want to hire her?) and may not be committed to the labor force.”
Part-time work or part-time schooling goes very well with child-rearing if you have the resources to make that work.
@ Nicole — well said! When I was in grad school, one of my profs said that doing a PhD and then taking time off for kids was basically career suicide. I think the same principle applies to other careers too.
I’m going to play devil’s advocate here though: If someone waits to finish their degree until they have children, then doing part time school rather than full time keeps them out of the workforce longer, and they’re coping with the expenses of school at the same time as the expenses of parenthood. The resources that were there before the kids came along might not be available once they do. (Or rather, the priorities may change).
And if Tracy isn’t ready for kids now, how long is going to put off her goal of finishing school, and how will that ultimately affect her long-term financial goals? What would happen if she had her kids and lost her spouse? (or the spouse lost his job?) Would she be in a better financial position with that finished degree?
Like I said, just playing devil’s advocate here 🙂 There are two sides to every issue, and ultimately it’s what works best for the person and his/her family.
My husband is currently reading Your Money or Your Life so we’ve been discussing it every night this week. I think it might be a good read for Tracy.
We need a certain amount of money to live comfortably. After that the money is not so important as other aspects of our lives, of which our vocation (which may or may not produce income) is one of them. The goal isn’t necessarily to optimize/maximize retirement savings, but to have enough. Getting a degree can fit with “enough,” even if it doesn’t pay as much in the long term as not getting the degree.
Otherwise nobody would get a PhD– they pay less than masters degrees once you factor in opportunity costs of time in school. But the PhD is a job requirement for some pretty nice job positions, and for some people (not me!) they have a positive consumption value during the time in the program.
There are a lot of factors to be taken into account when deciding whether or not to get more education (and when/if to have kids!), not just how much money one makes afterward.
#24 Sam – thanks for the link, I enjoyed the article very much.
#5 Gail Vaz-Oxlade – I’m a huge fan, keep up the good work!
More, please.
@Tyler (#57) — I think I remember that you and your wife do not have kids, right? Does anyone in your social circle or the outside world give her a hard time or see it as odd not to work outside the home with no kids in the picture? Obviously caring for an elderly father and volunteer work are extremely important work. I have to admit, though, that my first thought was that I would be very uncomfortable in that situation myself. What would she do if the two of you divorced?
Women need to start working for themselves — and they are, in greater numbers. We have the abilities to develop wonderful, creative and money-making businesses. I found this to be a great alternative, rather than having to deal with the constant age and sex discrimination that so many of us face. Now I blog and write eBooks and print books, and speak and sell them, besides selling online. New stats show that women are fleeing the workforce, using their own skills rather than remaining dependent on a system that isn’t that good, to start with.