Planning for women is unique because we tend to live longer than men, and often work and earn less over our lifetimes. The good news is that women are increasingly interested in planning for their futures. That being said, the two mistakes that I see my female clients make are: 1) prioritizing others ahead of themselves and 2) not being aggressive enough with their investments.
Women tend to be the nurturing gender, but that trait can have a dark side. It is not uncommon for mothers to put their children’s needs and wants ahead of their own. While meeting with one of my clients, we realized that more than half of her take-home pay each year was going to support her son in college.
The best thing that you can do for your children is to ensure your own financial independence. Caring for others is a powerful urge; a good financial plan can help you gauge how much help you can provide without damaging your own future.
I have conducted more than 80 research interviews about women’s views on money, and have found that the answer to “What is important about money to you?” is almost always “security”, but how you define “security” is critical to your success.
Cash, bonds and fixed income investments have traditionally offered a great deal of short-term security. However, when viewed against the backdrop of long-term inflation and the incredible erosion of purchasing power that results, an over-reliance on these types of investments can actually be toxic for someone who’s investing timeline spans two or three decades. Without a good, long-term plan and a trusted advisor helping you, a common mistake is to focus on short-term security while over-looking the importance of long-term growth.
Stock markets go up and down and it is a mistake to react to those ups and downs by keeping all of our money in “safe” investments such as CD’s, bonds or savings accounts. Because women can live 30 or more years in retirement, we are likely to see our cost of living double, triple or more while we are retired. For most of us, the best preparation is to have a thoughtful mix of stocks, bonds and cash that will allow us flexibility, freedom and long-term security in retirement, even if we live to be 100 (or more!).
Megan Poore is a Senior Advisor Associate with Lucien, Stirling and Gray Advisory Group, Inc. She invites women who live in Austin to contact her to schedule an R&D interview so that she can add your two cents to her growing statistical base! mpoore@lsggroup.com or 512.458.2517.
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