Financially WISE Women

by Katie Case
Financially WISE Women Workshop
With Melinda Sung, CFP® is a Financial Advisor at Morgan Stanley in the Atlanta Terminus Branch
June 25th@ The Purple Corkscrew

Statistically speaking, women’s retirement savings are miniscule compared to our male counterparts – an almost 2/3 ratio!

Why?
o Well, on average, women earn about 25% LESS than men (which means less income, less savings)

o Women also take on multiple roles throughout their lives, primarily those of caregiver either to children or aging parents, which makes them less likely to put energy into investments and tracking their savings

o Women also tend to take less risk when it comes to investing their money, thus leaving them behind on taking advantage of the market

Melinda Sung, CFP, quoted a statistic that claimed that almost 40% of women do not sit down with a financial advisor at any point in their lifetimes.

Here’s another tidbit: Women tend to rely more heavily on Social Security than men do, which leaves many women reliant on a check each month and with less options.

o This also becomes a young woman’s issue because there is NO guarantee that we will even have Social Security once we retire. We are currently putting money into a system that we have a good chance of never benefiting from, which leaves the need to explore MORE options of how to save and prepare for retirement.

Some tips on how to start thinking about saving for retirement:
o Think realistically about where you want to be once you retire
o Be mindful of the economy and the cost associated with the state of it
o We are living longer so there’s a good chance you could be technically retired for more than 30 years or so. Prepare!
o Healthcare = such as medical expenses associated with advanced age or in general

Unfortunately, according to Ms. Sung there is no magic formula for how to predict what could happen in your life that could impact your retirement savings, but we all need to have realistic expectations about the cost of living, how to maintain that in retirement, and to make sure all our bases covered.
Savings and Investments

Steps to Take:
o Have an Emergency Fund so that you won’t have to dip into your retirement savings if anything unexpected happens such as a medical emergency or losing a job.
o Set up a Tax Deferred Account, here are some reasons why:
o Lowers taxable income/ tax liability
o Win-win situation since as long as you don’t touch the account, you will not be taxed on it until you do (which means technically when you retire)
o Jump starts retirement savings (organic growth)
o = less taxes on your $$

So, besides your 401K and an Emergency Fund, what kind of deferred account should you choose? Melinda Sung recommends a Roth IRA account since it is an “after tax” account and after 5 years, it will grow in taxes.

Investing your money always seems tricky or too risky, but a little risk sometimes goes a long way. Melinda Sung recommends you get the big picture and acquire as much information as you can before you take the dive. Also, make sure you have a financial advisor who can help you plan and make the first move. It’s always good to have someone review your investments, just in case; especially since the majority of us don’t work on Wall Street… also don’t let anyone invest your money without them giving you sufficient information as to why you should invest with them! There are endless options for investing your money, and if done wisely, can yield an enormous return for your retirement savings.

401K – how much is too much? Melinda suggests that if your cash flow can handle it, then max out on your 401K. Match the rate that’s invested! Make sure you know the percentage your company uses for your 401K.

If you have multiple 401K accounts from multiple jobs, then you have the option of Rollover IRA. Having your money in just one big pot makes it super easy for you to keep watch over your money. Make sure you keep up with your 401K accounts when leaving and starting new jobs.

It’s never too early to start thinking about retirement!