Building a Strong Financial Future: Tackling Common Financial Planning Challenges for Women
According to recent research by Fidelity, women are more likely than men to stay the course and wait out market volatility when it occurs.1 But while this steadiness may help women avoid locking in losses by panic selling, this research also revealed some special challenges for women. Read on to learn more about the most common financial planning challenges women face and how to tackle them.
Financial Challenges for Women
The Fidelity study1 showed that women might feel more motivated to invest when:
- There were no fees.
- They had clear next steps to get started.
- They could talk to a financial professional who has trained in the factors that impact their finances.
This research reveals that women may benefit from financial guidance beyond the kind found in blog posts and articles. Some other challenges women face include having a longer average lifespan than men, the gender pay gap, and the risk of having their careers interrupted by family responsibilities.
Longer Lifespan
Women tend to live longer than men. This means it's important to plan to support yourself during a longer retirement. As a woman, you must carefully budget and save to have enough funds to potentially support yourself for several decades or longer.
Gender Pay Gap
The gender pay gap means women typically earn less than men over their lifetimes. This might make it harder to save for retirement and build wealth. Consider talking to recruiters and checking your salary against public sources to ensure you're being adequately compensated for your skills. Sometimes, leaving a long-term employer for a better job offer might provide a boost to your W-2 earnings.
Career Interruptions
Women may take breaks from their careers to raise children, care for aging parents, or for other caregiving responsibilities. These interruptions might impact their earning potential, retirement savings, and overall financial stability.
Part-Time Work and Flexible Jobs
Many women opt for jobs with flexible hours to balance their work and family responsibilities. But this flexibility may come at a cost. It may lead to lower wages, less access to benefits such as retirement plans, and possibly limit their opportunities for career advancement.
Investment Knowledge and Confidence
Research, including the recent Fidelity study1, suggests that women may be more risk-averse than men. This might lead to missed opportunities for wealth accumulation and retirement planning. Access to financial education and resources tailored to women's needs might help address this challenge.
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