Home Guides & Resources chevron_right Financial Planning Women & Wealth: Financial and Retirement Planning Strategies July 28, 2022 Women acquire their wealth in different ways. Many work and save for years, others receive an inheritance, some sell their longstanding business, and the list goes on. No matter how you earn your money, there are critical financial and retirement planning strategies women need to consider. In today’s post, we discuss several approaches to help women strengthen their financial futures. Diversify Employer Stock Options A key mistake many women make is holding a too-concentrated amount of their employer’s stocks. If your employer stock options make up 20% or more of your total net worth, including RSUs and ESPP shares, then consider diversifying these investments. Make sure you also account for company stocks held in your 401(k). Before you make changes, speak with a financial adviser to determine if there’s a tax impact. Special Report: Top Ten Investor Blunders Are you making common investing mistakes? Find out now. View Special Report Manage Rising Financial Burdens Financial responsibilities of middle-aged Americans are increasing. Many are financially sandwiched (aka the “Sandwich Generation”) between their aging parents and adult children. According to the Pew Research Center, nearly half (47%) of adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or financially supporting a grown child (age 18 or older). Also, about one-in-seven middle-aged adults (15%) is providing financial support to both an aging parent and a child. Pew also reports that, contrary to conventional wisdom, “the increased pressure is coming primarily from grown children rather than aging parents.” Tip: For straightforward financial advice from our experts, subscribe to The Adviser You Can Talk To Podcast. Also, receive bi-weekly market trends and analysis of critical investment topics via your inbox when you sign up for our Adviser Fund Update newsletter. If you’re part of the Sandwich Generation, try these two financial planning strategies to free up funds to save more for retirement: Meet with a financial adviser. You and your parents should both consult with a financial adviser. The adviser can optimize your parents’ retirement income withdrawal strategy, ensuring investments are cost-effective and tax-efficient. You too should meet with an adviser, ensuring you’re invested in the most efficient way. Your adviser can provide financial scenarios, including estimating your retirement income based on different risk levels. Without this modeling, how do you know if you’re taking too little or too much risk? Budget as a family. Each family member you’re financially supporting should have a budget that you can all agree on. And your adult children should have a financial plan that removes your financial support over time. To generate more savings for your retirement, take the lead in helping your family become more financially efficient. Prepare for Pre-Retirement As you approach retirement, it’s important to review how your financial decisions impact your retirement income withdrawal plan. For example, are you taking advantage of Roth IRA benefits in addition to a traditional IRA or 401(k)? While you pay taxes on the former now, you may withdraw from this account tax-free during retirement. Other Pre-Retirement Considerations Include: Identifying the ideal time to claim Social Security. Planning for health care coverage gaps before Medicare coverage becomes available. Determining whether you still need life insurance. Buy or Sell a House After Divorce Women over age 50 are divorcing in record numbers. Reestablishing a financial footing after divorce is challenging for many women, since you’re left with little time to rebuild your retirement savings after splitting it with your ex-spouse. What’s more, you’ll likely outlive your ex, necessitating a larger nest egg. One of the most critical financial decisions divorced (and widowed) women make is whether to buy or sell a home. There is no right answer, however, we discuss the ins and outs of making this decision in our AdviseHer podcast: How to Know When Homebuying’s Right For You. Tip: If you’ve lost half your savings due to divorce, check out our post: Can You Retire on $500K Plus Social Security?. It’s amazing what can be accomplished when you create a financial plan. Get Involved With Women and Wealth Initiatives When you participate in women and wealth events, you’re surrounding yourself with like-minded individuals; women seeking a strong financial future for themselves and others. Similarities also spur sharing, increasing your financial knowledge and motivation to accomplish your financial goals. An easy place to start is a site like Meetup.com, where people gather in-person or online to meet people, find support, grow a business and explore shared interests. If you’re not finding what you want—host your own meetup. It could be as simple as a monthly book club. There are countless financial books, including The Psychology of Money: Timeless lessons on wealth, greed, and happiness by Morgan Housel, or The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money by Carl Richards. Both will generate active conversation among women interested in strengthening their financial futures. Update Beneficiaries and Estate Plans Two of the most overlooked financial planning steps for women are updating primary beneficiaries assigned to your financial accounts and naming the executor of your estate. We recommend reviewing all estate planning documents once a year, and after any significant change in your life, e.g., adoption, aging-parent caregiving, birth, death, divorce, illness, marriage, etc. Tip: Understand common themes facing women investors in today’s marketplace, and how to overcome these obstacles. Listen to our AdviseHer Podcast: Differences in Women’s Investing. Next Steps There are many financial challenges and considerations as you approach retirement—and the closer you are to retiring, the more critical it is to meet with an experienced financial planner. A planner will ensure you have a diversified mix of investments, helping to sustain your savings during market fluctuations, and optimize your Social Security and tax situations, ultimately helping you keep more money in your pocket. If you want help navigating life’s financial complexities, contact Adviser Investments anytime for assistance. We pride ourselves on being The Planner You Can Talk To. Tax and legal information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice. Always consult a licensed attorney or tax professional regarding your specific legal or tax situation. Our statements and opinions are subject to change without notice. All investments carry risk of loss and there is no guarantee that investment objectives will be achieved. © 2022 Adviser Investments, LLC. All Rights Reserved.