Women’s increasing wealth is a positive trend that has emerged in recent years as they continue earning more, inheriting more, and taking a more active role in managing their finances. As a result, women’s financial power is growing. Women are in control of a third of U.S. household financial assets – more than $10 Trillion, a figure expected to triple to $30 trillion by 2030.1
As women’s wealth and investment footprint has grown so has their priority to plan judiciously. According to a study done by Cerulli Associates the financial planning process is paramount to women investors. They found that women investors would rather engage in a holistic, goals-based process that prioritize financial planning over portfolio construction.2
Women face unique financial planning considerations due to a variety of factors including gender pay gaps, career breaks for caregiving, longer life expectancy, and other societal and economic factors. Keeping in mind that every individual and family’s situation requires unique planning, here are key considerations that should be evaluated.
- Retirement Planning
As women continue to increase their income streams, simply saving into your retirement plan may no longer be sufficient for you to meet your goals. If you are already maximizing your retirement plan savings ($22,500 for a 401(k) in 2023 with an additional catch-up contribution of $7,500 for those over the age of 50), saving into other vehicles and the tax implications of those savings techniques should be considered.
- Investment Management
While women are known for investing less than men, their returns have historically been higher while taking on less risk in their portfolios.3 Regardless of your investment style, investing on your own can be an overwhelming task. Our advisors, along with the expert guidance from our portfolio management team, are diligent in selecting appropriately structured models that support in meeting your goals and your risk tolerance.
- Estate Planning
As your assets continue to appreciate over your career as well as the likelihood that women outlive their spouse, it is important to have an estate plan in place so that your assets are passed to your heirs and/or charitable groups according to your wishes and in a tax-efficient manner. This can include creating a will, establishing trusts, and naming beneficiaries for retirement accounts. These estate planning strategies can range in complexity and should be a top priority for your overall financial plan.
- Protection for Your Family
More than 40% of women earn more than their male partners4 making it crucial to conduct an in-depth analysis to determine that the appropriate life insurance, disability insurance, and long-term care insurance strategies are in place to protect loved ones in case of a premature death or illness.
- Education Planning
Women often prioritize funding for their children’s and grandchildren’s education, which can be challenging given the rising costs of tuition. It may be helpful to collaborate with a financial advisor to create a savings plan that considers future education expenses.
Ruth Bader Ginsburg said, “Women belong in all places where decisions are being made. It should not be the exception.” As women’s careers continue to flourish and with inheritances often passed to a surviving spouse, now is the time for women to take an active role in their family’s finances and prioritize financial planning. Utilizing a financial advisor can help you navigate these considerations and create a personalized plan that meets your unique needs and circumstances. And while the task may be overwhelming, rest assured that Fragasso Financial Advisors is here to help you every step of the way.