It’s National Women’s History Month and today and every day we are so proud of the role we have in helping women work toward achieving their financial goals. Do you know women currently control $10 trillion of wealth[1]? And, according to CNBC, by 2023, it’s projected we’ll control 3 times as much - $30 trillion!
I frequently hear from women clients they don’t know where to get started or how to plan for their future. My advice is – the future is bright and let’s take charge now. 86% of women report they feel less stressed about their investments when working with a professional[2].
My best piece of advice for all investors is to get engaging in financial planning as early as you can. (And, if you’re reading this and thinking you’re too late, that’s not true either). Get started now, work toward your goals and take control of the wealth you have.
The majority of women are investing outside of retirement (86%) according to the CNBC article. Set your financial behaviors now and they’ll become a habit that you’ll continue once you’ve finished raising your families or spending most of your time focused on your career. And you know how the old saying goes, “old habits are hard to break,” this is true for finances too!
Women tell us a barrier to investing or saving is they are overwhelmed with the effort it takes. Start small, little steps in financial planning or saving can really add up. The key is getting started and sticking with it.
I remember when coffee shops became the norm and suddenly spending $4 on a latte every day was commonplace. It was easy to not realize how much we spent on coffee each month. It seems trivial but it’s true, if we spend money without a plan, it’s easy to lose track. Making your coffee at home is a good way to save money. If this sounds like parental advice, it is. And they are right!
Consider this information that’s been making the rounds online, attributed to @buffettsuccess (yes, Warren Buffet).
Here is my challenge to you during Women’s History Month:
- Commit to saving a certain amount each month
- Look at your personal budget and get rid of money sucks like subscriptions, meals and coffee habits (allow room for an occasional purchase, but look at it as a treat, not a necessity)
- Make an appointment with a financial professional to learn your saving and investing options and build a plan
- Start saving in small ways like contributing to an employer-sponsored 401K or open a traditional or Roth RA account (or if you are self-employed, look into a SEP IRA). Keep in mind the limits:
In 2023, savers can contribute $6,500 to an IRA, or $7,500 if they’re age 50 and older. Beginning in 2024, those limits will be indexed to inflation. Comparatively, Roth accounts have an income limit of $153,000 for single taxpayers, and $228,000 for those who are married filing jointly.[3]
Consider this Investopedia example:
Let’s say you start investing in the market at $100 a month, and you average a positive return of 1% a month or 12% a year, compounded monthly over 40 years. Your friend, who is the same age, doesn’t begin investing until 30 years later, and invests $1,000 a month for 10 years, also averaging 1% a month or 12% a year, compounded monthly.
Who Will Have More Money Saved Up in the End?
Your friend will have saved up around $230,000. Your retirement account will be a little over $1.17 million. Even though your friend was investing over 10 times as much as you toward the end, the power of compound interest makes your portfolio significantly bigger.[4]
Financial planning is about the end-game, working to set yourself up to achieve what you want in the future, like paying off debts, buying a house, switching jobs, traveling and saving for retirement. CNBC says 55% of Americans are behind on saving for retirement. We can help you get on track and catch up. Fidelity recommends saving at least the equivalent of your salary by 30, three times your salary by 40, six times by 50, eight times by 60 and 10 times by 67.[5]
Most of us hit our highest earning years later in our careers, so it’s not always feasible to meet these saving milestones early on. If you have a plan that you revisit every year, you can work towards increasing savings as your income rises. Every deposit into your savings helps, no matter how small, and incrementally increasing contributions every year helps too.
As we make more, we usually adjust our spending and end up spending more. Don’t forget to do the same with your savings. Keep pace with your income, as it all adds up. According to MarketWatch, our retirement income comes from multiple streams including savings, investments, Social Security and less common benefits like pensions or inheritance.
MA few dollars may not seem like much but retirement accounts benefit from compound interest, which is when contributions grow with returns or interest on top of past contributions.[6]
MarketWatch explains: if someone opens a traditional account and contributes $10 at the end of every month from age 25 to 65, assuming a 6% rate of return, they would have about $20,000 in their account at the end of that period. That’s a significant savings for $10 a month!
Like Warren Buffet sagely advices, saving $10 per day equals $3,650 per year. It’s within our grasp to take control of our future. As more companies move away from pensions, savings and other tools are more important than ever.
$10 trillion21
Current amount of wealth women control
$30 trillion21
Projected amount of wealth expected to be controlled by women in 2032
53 percent21
Percentage of women currently investing in ESG funds
67 percent22
Percentage of women investing outside of retirement
86 percent22
Percentage of women less stressed by outsourcing their investments to a professional
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- WSJ.com, February 28, 2023
- FoxBusiness.com, February 24, 2023
- SectorSPDR.com, February 28, 2023
- CMEGroup.com, February 28, 2023
- MSCI.com, February 28, 2023
- MSCI.com, February 28, 2023
- MSCI.com, February 28, 2023
- WSJ.com, February 23, 2023
- CNBC.com, February 3, 2023
- WSJ.com, February 15, 2023
- FederalReserve.gov, February 15, 2023
- Reuters.com, February 16, 2023
- CNBC.com, February 21, 2023
- Bloomberg.com, February 24, 2023
- WSJ.com, February 14, 2023
- Morningstar.com, February 27, 2023
- WSJ.com, February 22, 2023
- Today.com, March 3, 2022
- Archives.gov, February 8, 2022
- Census.gov, March 1, 2022
- CNBC.com, May 3, 2022
- Fidelity.com, 2021
[1] CNBC.com, May 3, 2022
[2] Fidelity.com, 2021
[3] https://www.marketwatch.com/story/celebrate-this-savings-week-by-opening-an-ira-even-if-you-only-put-in-10-8a3eb4a5
[4] https://www.investopedia.com/articles/personal-finance/040315/why-save-retirement-your-20s.asp
[5] https://www.cnbc.com/2022/11/04/more-than-half-of-americans-behind-on-retirement-savings.html
[6] https://www.marketwatch.com/story/celebrate-this-savings-week-by-opening-an-ira-even-if-you-only-put-in-10-8a3eb4a5