A financial planner tells women what they need to learn about their finances
Financial Advice for Women in Their 50s
by Gary Foreman
Women and Financial Security
A Tool to Determine the Best Time to Take Social Security Benefits
Retirees Fear Running Out of Money
More and more women in their fifties are deciding that they need to play a greater role in their family's financial affairs. To help us understand what financial advice would be important to them, we enlisted the help of Michelle Perry Higgins. Ms. Higgins is a financial planner and principal of California Financial Advisors. Since 1996 she has built a successful practice advising executive professionals into retirement. She's published three books including The Everything Binder and can be found on her website MichellePerryHiggins.com.
Q1. What's the most important financial fact that women in their 50s tend to overlook?
- Women will control two-thirds of consumer wealth in the U.S. over the next decade and be the beneficiaries of the largest transference of wealth in our country's history.
- 80 to 90 percent of women will be solely responsible for their finances at some point in their lives, mainly due to divorce and the fact that, on average, women outlive men by seven years.
- Fewer than two in ten women feel very prepared to make wise financial decisions.
(Stats from Michelle Perry Higgins' book, Stocks, Bonds & Soccer Moms: 7 Steps to a Balanced Life)
These are powerful statistics which is why I am so passionate about educating women on finances and giving them the tools to feel financially fit. Women will control their wealth and need to take steps to fully understand what is taking place fiscally under their own roof. Here are five steps to get them on the right track:
- Meet with a financial planner and lay out your retirement plan. Know exactly how much you should be saving in every pot (eg. emergency reserves, retirement, college savings). Also, track every penny you spend so you have a strong record of your living expenses.
- Organize all your financial, estate, and personal affairs in one location for your heirs. A great tool I created for this is The Everything Binder found at TheEverythingBinder.com.
- Have an aggressive debt payoff strategy. No debt is good debt. Work hard every month to pay down the principal on your cars, college loans, credit card, even the mortgage.
- Every year increase retirement savings by 1%.
- Complete your estate plan.
Q2. What's the most important financial thing for women to accomplish before they reach age 60?
This is a tough one. Assuming she already has 1-5 completed above, next would be to ensure she has her long-term care needs covered. Evaluate purchasing long-term care insurance if she can't afford to self-insure.
Q3. How can a woman in her 50s be sure that she's on the right track financially?
Have a financial plan. I can't stress enough the importance of working with a financial planner who clearly lays out your financial future. There should be no grey area as to when you can retire, what your lifestyle will look like, and if there is a risk you will run out of money. The plan should be revisited at least annually.
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.
Take the Next Step:
- Determine if debt could derail your retirement and what you can do about it now. Our checklist can help you. Afterall, one of the most important ingredients for a comfortable retirement is to be debt free when you retire.
- Use this tool to maximize your retirement by determining the best age to take your Social Security benefits. Don't leave thousands on the table by taking Social Security at the wrong time.
- Subscribe to After 50 Finances. You've learned how to work smarter, not harder. This weekly newsletter is dedicated to people just like you. Subscribers get a FREE copy of our After 50 Finances Pre-Retirement Checklist, a list of everything you need to do to be ready for retirement.
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