BY JULIA ANDERSON
The financial advice industry is licking its chops over a Bloomberg forecast that American women could see their household financial assets triple in value over the next decade!
Baby Boomer women will be outliving their spouses at an increasing rate as they age into their late 70s and 80s, which means they inherit his tax-deferred retirement savings (401k and IRAs), the equity they may have accumulated in the house and other real estate they own and any other long-term assets.
Meanwhile, younger women, Bloomberg says, are becoming “more financially savvy.” Their net worth is increasing as they put more income into long-term retirement savings. Generally, younger women are smarter about saving, investing, and spending money, the report said.
We are talking about a huge wealth gain, which at first glance may seem over-the-top. Today, Bloomberg estimated that women control about $10 trillion in U.S. household financial assets – savings, investments, real estate etc. By 2030 that total will jump to $30 trillion. That’s trillion with a T!!
Here at sixtyandsingle.com, we have preached that women must prepare for a time when they will be financially on their own. Even if you turn to an outside consultant to manage your money, your own financially literacy is key to doing it successfully.
Steps you can take now:
1. Talk with your spouse about your financial future without him. What will it look like?
2. Determine your net worth by subtracting your total assets from your debt.
3. Make sure you both understand the long-term estate planning strategy.
4. What income can you count on your later years? The answers are there.
5. Will there be estate taxes at his death. How do you transfer his IRA account without paying taxes? Should you pay off the mortgage? All questions worth asking.
6. How do you know if you have a good (honest) investment adviser?
Tips for hiring a financial adviser (if you need one):
As we said, the financial industry wants to manage your money and charge you a fee for doing that management. Just make sure you are earning more from your investment savings than they are. Here are questions to ask:
- How are you paid? A flat fee for service based on total assets, a commission on investment product sales, or all of the above?
- Can you manage my assets for 1 percent or less in fees? If not, why not?
- What is the strength of the company you work for?
- Will you put your proposals in writing?
These basic questions will get you on the right track with the person you are entrusting with your financial well-being. Do not hire or continue to use a financial adviser just because they are nice!!!
Regrettably, only 15 to 20 percent of America’s financial advisers are women, Barron's said in its report. The industry would do well to make itself more attractive to women, especially since women tend to outperform men as money managers, Barron’s said.
Meanwhile, talking to a spouse about your financial future without them is a difficult conversation to have but worth the peace of mind for both of you. According to Bloomberg, a lot of money is at stake. You may be worth more in your later years than you think.
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I meet women all the time who face job and money transitions and who want to do them right. It’s about building confidence and taking charge of the future. This is your money. No one cares more than you do!
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