Women are at a Disadvantage When it Comes to Financial Planning

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Women Face Unique Financial Challenges. If you were to guess which issue women worry about most, would you guess family, health, time, stress, or maybe equal rights? According to a March 2000 gallop poll, the answer is their finances. This response may surprise you now, but consider the following list of financial issues unique to women.

Consider these results from a women-and-money incubator, and research by Bruce W. Most and William L. Anthes:

– “Women are more intimidated than men about financial issues

– Women earn less money than men

– Women are less prepared for retirement

– Women receive smaller retirement benefits

– Women live longer than men

– Women are poorer in retirement than men

– Women are more conservative investors than men”

We would also add

– Special difficulties for single mothers

– Women caring for elderly parents

– High-deductible health insurance plans cost women more

– Women may defer to men regarding financial decisions

– More women manage daily family finances

– Retirement issues because of divorce agreements

– Male-dominated financial services industry

Earnings Differences

It is a well-documented fact that women earn less than men do. A study by the American Association of University Women Educational Foundation as reported by Ellen Simon {AP}:”Women make only 80 percent of the salaries their male peers do one year after college…10 years after college, women earn only 69 percent of what men earn…Even after controlling for hours, occupation, parenthood, and other factors known to affect earnings,” the study found that one-quarter of the pay gap remains unexplained.

Most and Anthes report that “According to the U.S. Department of Labor, women working full-time, year-round, earn roughly 74 percent of what men earn… (and) workers in the age category of 45–54-the prime earning years for most people-women earned $516 a week while men earned $732.” It gets even worse for single mothers with young children whose “median income in 1998…was $14,248. This figure is the lowest among all family types, representing roughly one-fourth the median income of married-couples with children…and approximately three-fifths that of females with no children.”

Retirement Differences

Women are often less prepared for retirement than men. Most and Anthes also noted that a study that found 58 percent of baby boomer women had saved less than $10,000 in a pension or 401(k) plan, while baby boomer men had saved three times that. In addition, the fact that women live longer than men means that they need more money in their retirement than men do.

Investment Differences

Also, a 1997 study by Dryfus and the National Center for Women and Retirement Research showed that women investors were more worried than men about running out of money in old age, preferred more conservative investments, wanted fixed/steady returns, were more unnerved by stock fluctuations and worried more about investment decisions.

Social Security Retirement Differences

Of course, less money earned by women, means less money saved for retirement or contributed to Social Security benefits, and because women live 79 years on average while men live 72, women retirees are poorer in retirement than men. Most and Anthes note that according to the Administration on Aging “…half the elderly widows now living in poverty were not living in poverty before their husbands died. The picture is even worse for older women in many minority groups”.

Decision Making

The next generation of retirees may have been raised in an environment in which men handled the money decisions. More women actually pay the weekly bills, but they may have little knowledge of the larger family finances such as retirement plans, Social Security, IRAs, insurance, annuities, etc. because they may have deferred to their spouse’s decisions.

It is essential for women to understand the ‘big picture’ of their finances, especially for retirement, divorce, or death of their spouse. Because women make less than men, are less prepared for retirement, and receive smaller retirement benefits, they need to make sure that their husband’s retirement benefits will pass to them if their husband dies first. Because women may be more intimidated about asking questions of their attorney or financial advisor, they may miss crucial details (such as single-life annuity which may bring higher levels during the husband’s life but that ends when the husband dies first), or incorrect beneficiaries on life insurance policies.


During a divorce, women may be more concerned about custody issues and keeping the house than their future retirement and may agree to forgo the 401(k). Single parenting brings a whole host of financial challenges, including lost wages from parenting responsibilities and childcare and babysitters. If the extra expenses and possibly lower income are not included in the divorce settlement, the single mother may find that she is unable to keep the house and she loses the two most valuable assets: the house and the 401(k).

Health Insurance

Women not only make less money than men, their health plan may cost more reports Mike Stobbe {AP}. When an employer changes to a high-deductible plan, it costs on average $1000/year more for women than for men due to mammograms, the cervical-cancer vaccine, Pap tests and pregnancy related services. This is unfair, but while the inequity exists, women must make an extra effort to contribute the difference to a Health Savings Account or savings program to avoid using credit to pay for the added medical bills. We have personally experienced the $4,000 deductible per year health insurance plan and, although it is better than no insurance, it can certainly make a dent in the family budget.

Care Giving

Another huge drain on women’s finances is caring for their aging parents. More women care for aging parents than men. However distasteful it may be to condense a daughter’s love for her parents into a discussion of money, this issue must be addressed so that women can prepare. Because of the aging baby-boomer population, these numbers will soon become staggering. If you add caring for young children into the mix at the same time, the financial results can be devastating.

What Should Women Do?

Because of the special issues facing women, it is crucial that women educate themselves about finances and the realities of financial gender inequity and plan for their future. The male-dominated financial services industry is just beginning to realize the unique financial planning issues for women. Make sure that your trusted advisors understand these issues and are helping you plan accordingly. Don’t be afraid to ask your advisors questions.

Summary Now is the time to begin planning for the future:

– Have a plan

– Increase your knowledge and understanding of financial matters

– Utilize trusted professional advisors to implement your plans

– Regularly monitor your progress.

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