Good Luck, Women -- Your Path to Financial Success Is Steeper

Paying attention to financial matters now can lead to a more comfortable retirement.

There are some big advantages to being a woman, such as the fact that women tend to live longer than men. But there are drawbacks, too -- including significant financial ones. We all need to be actively involved in planning for our financial futures, but women might want to work even harder at it in order to overcome a bunch of headwinds.

What exactly is making it harder for women to achieve financial security? Well, lots of things.

Women are less confidentFor starters, women tend to approach finances with less gusto than men. Numerous studies have found that women are less confident about their money management skills. A 2013 Fidelity survey, for example, found 57% of women feeling confident and prepared, vs. 65% of men -- despite achieving very similar investing results. A famous 1998 study by Brad Barber and Terrance Odean foundmen prone to be overconfident of their investing prowess, leading their results to lag those of women.

The silver lining in women being less confident is that they usually approach money matters more cautiously, and often with better results. They can be more open to seeking professional advice, too.

Betty White, who recently turned 93 and long widowed, is a good reminder that women tend to live longer than men. Source: David Shankbone, Flickr.

Women live longerHere's another double-edged issue, and a big one: Women tend to live longer than men. The upside is obvious -- more time on earth, more time with loved ones, and so on. The downside, though, is that your retirement nest egg and income have to last longer. For example, the life expectancy at birth in the U.S. is 77 for men and 82 for women (perthe CIA World Factbook). That's about five more years for women. (Don't let these numbers depress you; they're just averages, and you can improve your odds by taking care of your health.)

Women are widowed more oftenMaking matters worse is that not only do women have to support themselves longer, they will often have to do so without the aid of a spouse. Women are more likely to become widowed than men, and many women are on their own for many years.

Divorce can also hurt women's financial conditions. Very often, a couple won't realize when they've made a risky move. For example, if a husband retires early at 62 and begins drawing Social Security benefits, and then dies a few years later, his wife may live many more years relying on spousal Social Security benefits that aren't as generous as they might have been.

Women tend to pay more for healthcare.

Women pay more for healthcareStaying healthy is costlier for women than men, too. Accordingto 2012 data from the Health Care Cost Institute, per capita healthcare spending averaged $5,246 for women vs. $4,125 for men. That's a gap of more than $1,000 per year, and the gap is growing, too, with women's costs growing faster than men's.

Women earn less than menThis headwind is a big one, and it should be no secret to anyone. The White House websitenotes: "On average, full-time working women earn just 78 cents for every dollar a man earns," and it goes on to add:

Earning just 78% of what men earn puts women behind and makes it very hard for them to catch up. For one thing, smaller paychecks translate into smaller Social Security benefits later in life. They also tend to result in smaller contributions to retirement accounts.

Women spend less time in the workforceWomen also are much more likely than men to leave the workforce for some years, in order to raise children and/or take care of ailing family members. That's work, too, of course, but typically unpaid work -- meaning it doesn't help a nest egg grow, or generate additional years of earnings that can boost Social Security benefits down the road.

Start saving more aggressively and investing effectively, and you can turn your financial future around.

SolutionsTake all of the above factors into account, and the situation can look very grim. Fortunately, all is not lost. There are a number of ways women can improve their financial situation.

For starters, we need to read and learn more about personal finances and investing. We should be saving aggressively while we can, and investing that money effectively -- with long-term money likely to grow most briskly in the stock market, perhaps via a low-cost broad-market index fund, such as the SPDR S&P 500 ETF, Vanguard Total Stock Market ETF, and Vanguard Total World Stock ETF. Take advantage of tax-preferred retirement accounts such as IRAs and 401(k)s (both the traditional and Roth varieties), and look into immediate fixed annuities, too, which can provide guaranteed income for the rest of your life.

In relationships, partners can take care of each other via life insurance policies, and if you consider it while you're still relatively young, long-term care insurance policies might be considered, too. (They grow very expensive as you age and are not always affordable or advisable.) Don't be afraid to tap the services of a financial planner, either. You can find fee-only ones at the website of the National Association of Personal Financial Advisors.

Women face more obstacles on the path to financial security, but the road isn't closed. Take charge of getting yourself to a comfortable retirement.

The article Good Luck, Women -- Your Path to Financial Success Is Steeper originally appeared on

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