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Top Tips from Your Banker - Timely Tips Regarding Financial Management for Women

Top Tips from Your Banker - Timely Tips Regarding Financial Management for Women

To get some timely tips regarding financial management for women, we spoke with Lisa Abbott, Senior Vice President, Private Banking, for Cadence Bank.

Q: What are some of the unique financial challenges faced by women?

A: For starters, women in the U.S. live longer than men, on average. According to the Social Security Administration, the average life expectancy for U.S. women who have turned 50 is 83 while the average life expectancy for men who have turned 50 is 80. Therefore, women will need to save more money for retirement, on average, than men in order to avoid outliving their retirement savings.

At the same time, though, women earn less money than men, on average, and they accumulate less money than men for retirement, on average. According to the Institute for Women’s Policy Research, the gender wage gap is currently 20 percent. Also, women are more likely than men to take family leave during their careers, thus lowering their lifetime earnings even more.

Q: What advice do you have for women when it comes to saving enough money for a financially secure retirement?

A: The Women’s Institute for a Secure Retirement recommends that women develop three separate sources of money for retirement: individual savings, Social Security, and a pension or retirement savings plan like a 401(k). Doing so will help diversify your retirement income stream so you aren’t reliant on just one source of income to meet all of your living expenses during retirement.

In particular, you should try to max out contributions to your retirement savings plan each year. In 2017, you can contribute up to $18,000 to your 401(k) plan, or $24,000 if you are 50 years of age or over. The contribution limits for some other retirement plans are even higher. Women who own businesses, for example, can contribute up to $54,000 this year to a Simplified Employee Pension (or SEP) plan.

Q: Do you have any general money management tips for women?

A: One tip is that women should create a monthly budget and then follow it. This is also a good way to make sure you’re contributing as much money as possible to your retirement savings plan, because you can include retirement plan contributions in your monthly budget.

The best way to do this is to have your contributions automatically deducted from your pay and transferred directly into your plan each pay period. This is sometimes referred to as “paying yourself first” because you’re ensuring that before any bills are paid, you’re contributing to your own future financial security. Also, when the money comes out of your pay before you see it, you tend not to miss it as much.

Q: What about tips for women who are going through a divorce?

A:  If a woman is divorcing near the 10-year mark of her marriage, she needs to understand rules related to Social Security distributions. Social Security allows a divorced spouse to claim on the ex-spouse’s record only if the marriage lasted at least 10 years. This is especially important if the woman has been a stay-at-home mom or has had significantly lower earnings than her ex-husband throughout their marriage.

Q: What tips do you have for women when it comes to choosing a wealth advisor to work with?

A: A good first step is to ask friends and/or business associates whom you trust for recommendations. Then interview your top two or three candidates and ask them detailed questions about how they would manage your money and work with you in other aspects of wealth management, including estate and tax planning.

More Top Tips From Your Banker

 

Read more helpful tips and advice for managing your business at Cadence Bank’s Fresh Insights Portal.

 

 Wealth advisors may possess several different professional qualifications and credentials, including Certified Financial PlannerTM (CFP®), Chartered Financial Consultant® (ChFC®) and Chartered Financial Analyst® (CFA®). Ask about these credentials because they will reveal information about the wealth advisor’s areas of expertise and financial education.

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

 


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