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Posted: May 24, 2012

The rise of the new breadwinner

Making the most of your role

Liz Johnson

Not all that long ago, when many of the Baby Boomers were children, women in the workforce were still in the minority, more of an exception than the rule. However, a trend in the 21st century now shows women increasingly becoming the primary breadwinner of their households. Women 50 and older reportedly hold more than three-fourths of the nation’s financial wealth and nearly four in 10 working wives out-earn their husbands.

With these statistics in mind, and because we are often at the financial hub of the family – whether we want to be or not – it’s more important than ever for us as women to play an active role in managing our finances. Here are a few suggestions to help you get on the right track:

  • Tackle the must-do’s.  Cross off these essentials if you haven’t already:
    • Do you have a budget in place and are you living within your means?
    • If you have debt, do you have a plan in place to pay it off?
    • Are beneficiary designations in place and current?
    • If you have children, do you have a current will that reflects your wishes?
  • Determine your magic number. If you don’t yet have a vision for your “golden years,” discuss your plans for retirement and how much it might cost to make those plans a reality.  Whether you’re still building your nest egg or planning your first withdrawal, a woman’s financial plan has much more significant meaning now that women are expected to live into their 80s, nearly six years longer than their male companions on average.  Knowing the “magic number” or amount that you’ll need to see you through your retirement is a major step to creating a realistic game plan. Worried? You’re not alone. Both single and married people report feeling behind the eight-ball when it comes to retirement readiness. According to a recent Schwab survey, only 38 percent of married individuals feel prepared, while just 32 percent of singles report feeling confident about their retirement readiness.
  • Don’t fall into the parent trap. Saving for retirement and sending children to college are two of the biggest milestones women face when it comes to financial planning, but how should you decide between your child’s education and your own retirement? Cutting back on your retirement contributions may be tempting given the rising cost of tuition, but other options should be explored first. Remember, while your son or daughter has student loans at their disposal, you’ll be hard pressed to find someone who will fund your retirement. One approach might be to set a target of paying for two-thirds or a half of college and offering your kids a creative matching grant for every $1 they come up with. 
  • Consider a third-party’s perspective. Finances can be tricky regardless of age, marital status or career length, but no matter your situation, it’s important to understand your spending habits, income and existing debts. Sometimes an objective third party can help you get a better grasp of your current situation.
  • Most importantly, be involved. If you’re married, are you working as a team with your husband? If you’re single, do you have a plan in place to help you reach your financial goals? You don’t have to be an expert on the markets, but understanding what you have, what you want to achieve and how your money is being invested is a good start. Get everything out in the open, assess your net worth, see the progress you’ve made and then take a look at what may still need to be done.

For additional resources, including budgeting tools and calculators, visit www.schwabmoneywise.com. For a listing of free workshops that are available in your area, visit http://www.schwab.com/public/schwab/resource_center/workshops_videos/branch_workshops

Liz Johnson, CFP®, has 13 years of experience in the financial services industry. She is a passionate advocate for individual investors and has spent nearly 10 years giving advice to clients and training and managing others to provide advice.

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