When it comes to women and their money, there’s a lot to celebrate. Not only have they achieved broad-based financial successes over the last few decades, but women continue to make impressive financial gains. According to a Statistics Study of Income, nearly half (46%) of the wealthiest Americans are female. These 3.4 million affluent women have a combined net worth of $5.8 trillion and an average net worth of $1.71 million.² Women continue to enter the workforce in record numbers. In 2005, 59% of women 16 or older participated in the labor force and earned $1 trillion in annual wages.³ About one-third of working women are the primary breadwinners for their families. Education is another area of increasing success, with women obtaining the majority of bachelor’s and master’s degrees today.

Women are also starting businesses at rapid rates. For the past two decades, women-owned firms have grown at twice the rate of all firms. The Center for Women’s Business Research reports that nearly 10.4 million firms are owned by women generating $1.9 trillion in sales.⁴ While women have many money milestones to celebrate, they still face a range of gender-specific financial challenges. One critical issue is the pay gap. In 2005, women earned 77 cents for every $1 earned by men. Although this gap is narrowing, over a lifetime, it adds up to about $250,000 less in earnings for a woman to save and/or invest for her retirement.⁵ This earnings shortfall is compounded by the high likelihood that a woman will be responsible for her own or her family’s finances one day. When you consider that almost half of first and second marriages end in divorce and the average age of widowhood is 55, it’s not surprising that the majority of women will be the sole financial decision-makers for their households at some point in their lives.⁶ However, the greatest financial challenge may lie in the future, when millions of Baby Boomer women begin their retirements. Experts predict that many of the women retiring over the next 20 years will have less than one-third of the income necessary to retire comfortably.⁷ Why are women more likely than men to face serious financial shortfalls in retirement?

The key reasons include:

• Longer lives — Women live longer than men and can expect to fund longer retirements. According to the U.S. Department of Labor, a female retiring at age 55 can expect to live another 27 years, four years longer than a male retiring at the same age.⁸ These longer retirements increase the chances of women outliving their savings.
• Lower lifetime incomes and pension benefits — Women retirees receive about half the average pension benefits that men receive. This is partly due to the fact that many women tend to change jobs more frequently than men and don’t become vested in their plans, and many tend to hold jobs that don’t offer pensions. The average woman spends 15% of her working years outside the workforce caring for children and elderly relatives; this reduces her lifetime earnings and retirement savings and impacts her ability to vest in a pension or pay into Social Security.⁹
• Living alone — Women are increasingly living alone. Here’s a sobering statistic: while 80% of men pass away married, 80% of women pass on single. Women without personal savings often find their income drastically reduced by the loss of a spouse. Only 21% of widows receive income from their husband’s pension, and the average widow receives less than half of the Social Security benefits of a married couple. Yet, few women plan for losing a spouse and the financial consequences of living alone.

Despite these barriers, women can take control of their finances, plan for comfortable retirements and ensure their future economic security. To make the most of their emerging monetary clout, women should have an arsenal of financial tools and resources. Financial planning is one strategy that empowers women to address their unique money issues, reach their goals and realize
their dreams.

How women can plan for financial success

One of the critical financial tasks of establishing a savings and investment plan is to build retirement assets. With professional financial guidance, you can learn strategies for accumulating a substantial retirement nest egg while meeting your day-to-day money needs, attaining other savings goals and growing wealth. As a woman, you will need to consider your potential longer life expectancy and the impact of any time out of the workforce as you set savings goals for retirement. Retirement is also a time to consider the legacy you want to leave to loved ones and causes you care about. Your financial plan may include an estate plan that provides for future financial gifts to family members, friends and charities and documents your wishes for the future. No matter what age you are or stage of life you are in, working with your financial advisor can help enable you to create a financial plan for attaining your goals, taking care of your loved ones and realizing your dreams.

Financial advice can help you make the most of your growing economic clout while addressing your unique money needs. If you don’t have a financial advisor, request a complimentary initial consultation today by calling (877) 267-7959 or click here.

1 “Managing your money, 2005,” The National Association of Personal Financial Advisors, by Stan Ehrlich.
2 “Personal Wealth, 2001,” Statistics of Income Bulletin, Winter 2005, by Barry W. Johnson and Brian G. Raub.
3 U.S. Census Bureau, Facts for Features: Women’s History Month, January 4, 2007
4 “Top Facts about Women-Owned Businesses,” Center for Women’s Business Research, 2006
5 U.S. Census Bureau, Facts for Features: Women’s History Month, January 4, 2007; National Older Women’s League
6 National Center for Women and Retirement Research
7 Women’s Institute for a Secure Retirement
8 U.S. Department of Labor
9 Women’s Institute for a Secure Retirement

Ameriprise Financial cannot guarantee future financial results.

The initial consultation provides an overview of financial planning concepts. You will not receive written analysis and/or recommendations.

Financial planning services and investments offered through Ameriprise Financial Services, Inc. Member FINRA and SIPC.

© 2007 Ameriprise Financial, Inc. All rights reserved. (11/07)

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