Women and Money

WALL STREET FIRMS often direct marketing pitches at women, claiming that they have distinct financial needs. But in truth, women’s financial needs aren’t all that different from those of men, though there are five differences that are worth bearing in mind as you save and invest for retirement. First, women typically live longer than men, so it’s helpful if you have a somewhat larger nest egg and it can make even more sense to delay Social Security benefits to get a larger monthly check.

Second, there’s a greater chance you will end up in a nursing home. Thanks to their longer life expectancy, women typically outlive their husband or partner, and often there’s no one to provide care when they are ailing. You can learn more about nursing home costs, and how to handle them, in the safety net chapter.

Third, women often earn less than men, making it more difficult to save for retirement. In addition, there’s a fourth factor: Their careers may be interrupted by raising children, denting their total lifetime earnings and delaying their next promotion.

Finally, women tend to be less inclined to take investment risk than men. This is both good and bad. Women seem less drawn to high-risk investments—things like betting big on individual stocks, trading listed options, buying aggressive mutual funds—that often wreak havoc with men’s investment returns.

But women also appear to be less comfortable owning stocks generally, which can hurt their long-run results. If women can overcome this reluctance, however, they often make great investors, because they’re less inclined to buy the high-risk investments that can torpedo men’s results.

Next: 20s, 30s and 40s

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