Women are a powerful economic force, controlling nearly 40 percent—or $11.2 trillion—of all investable assets in the U.S. as primary decision makers, according to a report from the Center for Talent Innovation. They also represent almost half of the entire U.S. professional workforce. However, women face unique financial challenges, and the many roles they play—mother, daughter, sister, wife, business owner, employee—influence the many financial obligations they have for themselves and their families.
With so many responsibilities to juggle, how do you set your course for a secure financial future? By exploring the things that really matter to you, you can identify your priorities, develop a strategy for achieving your goals, and keep your balance as life unfolds.
What Wealth Means to You
When you think about your wealth, it’s more than just your money. True wealth is also about your life and the things you value most, as well as the relationships, interests and goals that bring you joy. Incorporating these vital elements into your overall wealth plan helps ensure you achieve the future you envision.
Developing a Strategy
As you begin to put a wealth management strategy in place, consider what you will need to plan for and how much you will need to achieve your goals:
- Paying for the education of your child or grandchild. According to the College Board, the average cost for a year of tuition at a private four-year college was $34,740 for the 2017-2018 school year. While the long-term average inflation rate is about three percent, college costs are rising at five to eight percent per year. Assuming a five-percent inflation rate, that same year of tuition will be $56,588 in 2028.
- Taking care of your parents or other family members as they get older. The Family Caregiver Alliance estimates that 53 to 68 percent of family caregivers are women. Being able to care for an ill, disabled or elderly family member can be rewarding work, but it can also have emotional and financial implications on your life. According to the Genworth 2017 Cost of Care Survey, the national median cost for one year in a private room in a nursing facility is now $97,455. This figure represents a nearly 50% increase since 2004.
- Transitioning your business. According to the National Association of Women Business Owners, women-owned businesses account for 39 percent of privately-held firms. If you are one of these women, creating a business success plan could be a critical component of your overall wealth plan.
- Enjoying a comfortable retirement. Although women make up nearly half of the workforce, women are still saving less for retirement than their male counterpart. Consider whether your savings and income stream in retirement will be enough to support your lifestyle. The average lifespan is increasing, so you will need to anticipate supporting a retirement that could last 20 to 30 years, or even longer.
- Creating an estate plan. Proper estate planning can have a long-lasting impact on your loved ones. In addition to putting you in control of how your wealth is passed on, estate planning can help minimize the tax burden for your heirs and prevent unnecessary family turmoil.
Keeping Your Balance
Life is always changing, whether by choice or circumstance. The financial strategies and decisions you make need to be flexible enough to accommodate the unexpected. If this sounds overwhelming, you don’t have to do it on your own. An experienced financial advisor can be a reliable source of objective information and ideas as you begin to assess how to best manage your wealth. iBi
Cathy S. Butler, CFP, CRPC, is a vice president, financial advisor and portfolio management director at Morgan Stanley Wealth Management. She can be reached by email at Cathy.Butler@morganstanley.com or by telephone at (309) 671-2873.