Women breadwinners and financial planning | Guest column

Women breadwinners and financial planning | Guest column

  • Thursday, August 6, 2020 1:30pm
  • Opinion

By Robert Toomey, Special to The Reporter

Women’s roles as it relates to financial planning have seen significant changes in the past several decades. This is reflected in a couple of ways: 1) women are increasingly choosing to not marry, and 2) women are increasingly the primary breadwinners in many households. These trends are raising new issues in the area of financial planning that are unique to women. Women now account for over 40% of primary breadwinners in U.S. households. It is estimated that by 2030, women will control two-thirds of U.S. wealth. Less than one-third of women feel financially prepared for later life goals such as retirement or children’s education.

A key financial planning issue for women is the fact that women live longer than men in general. The financial planning issue around this is what we refer to as “longevity risk”, meaning if a person lives long enough, she may outlive her assets. This raises planning questions around financial capacity, spending, and investment strategies. For example, if one is expected to live longer, it may mean investment assets may need to be invested for higher growth which normally would entail higher exposure to stocks and therefore subject the portfolio to higher volatility. While higher portfolio volatility may conceivably be discomforting, this should be offset by increased confidence that one has sufficient growth to achieve their long-term financial goals.

Many women state that one of their greatest needs from a financial planner is education as it relates to finances and investments. A good financial planner must be able to meet this need through demonstrating the benefit of a comprehensive financial plan and the benefits of investing for the long term using a multi-sector strategy. A comprehensive financial plan will take into account current and expected income sources, current and future income-generating assets, inflation and asset return assumptions, debts, inheritances, expenses, specific financial goals, and estate, charitable, or legacy planning goals. With respect to education pertaining to investments, an excellent starting point for many people is an understanding of how the financial markets operate and basics of the Capital Asset Pricing Model (CAPM). CAPM is an excellent foundational construct for defining the relationship between risk and return as it relates to diversified investment portfolios and is backed by over 60 years of research.

A majority of women breadwinners state they feel a high or relatively high level of stress around finances and financial preparedness. Part of this has to do with juggling many balls such as being a mom, having a heavy financial responsibility, maintaining a household, and in many cases, being in charge of family finances. A good financial plan prepared by a competent planner can go a long way towards providing significantly improved clarity of one’s financial roadmap and capacity. For most people, this clearly helps to reduce the stress around finances and improve their quality of life, particularly in knowing that one has significantly enhanced the probability of achieving their long-term financial goals by having a plan.

Robert Toomey, CFA/CFP, is Vice President of Research for S. R. Schill & Associates on Mercer Island.


In consideration of how we voice our opinions in the modern world, we’ve closed comments on our websites. We value the opinions of our readers and we encourage you to keep the conversation going.

Please feel free to share your story tips by emailing editor@mi-reporter.com.

To share your opinion for publication, submit a letter through our website https://www.mi-reporter.com/submit-letter/. Include your name, address and daytime phone number. (We’ll only publish your name and hometown.) We reserve the right to edit letters, but if you keep yours to 300 words or less, we won’t ask you to shorten it.

[flipp]

More in Opinion

Tim Eyman. File photo
Editorial: Judge’s rebuke of Eyman protects initiative process

Along with a $2.6 million fine, the ruling places restrictions on Eyman’s future initiative campaigns.

Courtesy image
Thoughts on police reform and public trust | Guest column

By Steven D. Strachan, Washington Association of Sheriffs and Police Chiefs The… Continue reading

Robert Toomey, CFA/CFP, is Vice President of Research for S. R. Schill & Associates on Mercer Island.
The GameStop phenomenon and its implications | Guest column

The past couple of weeks have been interesting with respect to speculative… Continue reading

A painted rock found on Mercer Island. Photo courtesy of Greg Asimakoupoulos
Signs of hope and messages of love | Guest column

It’s true! Valentine’s Day is not for lovers alone. Long ago, greeting… Continue reading

Don C. Brunell is a business analyst, writer and columnist. He recently retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at thebrunells@msn.com.
Hydrogen gains momentum as replacement fuel for trucks | Brunell

In the coming decade, European Union leaders are investing heavily in hydrogen… Continue reading

A CVS pharmacist prepares a shot of the Pfizer-BioNTech COVID-19 vaccine. File photo
Editorial: Give teachers a cut in line for covid vaccine

It’s worth considering to get kids back in classrooms, but schools can work to open safely for all.

Federal Way resident Bob Roegner is a former mayor of Auburn. Contact bjroegner@comcast.net.
Change is ahead for both political parties | Roegner

President Donald Trump changed the national political landscape. Both political parties have… Continue reading

Teaser
Signs of hope and love birds on Mercer Island

Inauguration Day. I’m listening to Amanda Gorman read her poem “The Hill… Continue reading

Guest columnist Greg Asimakoupoulos is chaplain at Covenant Living at the Shores in Mercer Island.
A prayer for our new president | Guest column

Once a year, for the past decade, I have given the invocation… Continue reading

Federal Way resident Bob Roegner is a former mayor of Auburn. Contact bjroegner@comcast.net.
Legislators of color will have impact on 2021 session | Roegner

The 2021 session of the Legislature has kicked off with virtual participation… Continue reading

Don C. Brunell is a business analyst, writer and columnist. He recently retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at thebrunells@msn.com.
Bracing for bigger changes in a COVID world | Brunell

Now that vaccines are available, we hope our lives will return to… Continue reading

Guest columnist Greg Asimakoupoulos is chaplain at Covenant Living at the Shores in Mercer Island.
Reflections on insurrection | Guest column

For Christians around the world, Jan. 6 is Epiphany. Sometimes called the… Continue reading