Littlejohn: Protecting women’s wealth

In the Roaring Fork Valley, where independence and prosperity are valued, protecting women’s wealth is more than a financial strategy … it’s a key to empowerment. Whether navigating the complexities of entrepreneurship, managing generational wealth, or planning for a secure retirement, women face a unique set of financial challenges and opportunities. I’d like to take a minute to mention a few of the ways women can safeguard their assets, build resilient financial plans, and make confident decisions that reflect both their values and vision for the future.

Financial best practices for all

Many personal finance best practices are gender neutral. For example, I believe that 99% of the population is best served by: 

• Establishing goals and crafting a thoughtful financial plan to achieve them 
• Building and maintaining an investment portfolio that supports the plan
• Sticking to the plan and portfolio over time, updating them as life happens

Strength in numbers

As I advise women about their wealth, some of the assumptions we use are actuarial, or data driven. For example, statistics have long shown that, in aggregate, women tend to outlive men. Some recent (2022) data available from the U.S. Centers for Disease Control lists a 50-year-old woman’s life expectancy as 82.8 years, while a 50-year-old man’s is 79.1 years. Girls and boys born today are projected to live 80.2 years and 74.8 years, respectively. 

You may have valid reasons to believe your personal financial planning assumptions don’t conform to these broad U.S. statistics. If you are a woman in a committed relationship with a man, you and your partner’s age spread, genetics, personal health, and/or lifestyle choices might suggest that different assumptions are in order. But all else being equal, if you are more likely than your partner to become the surviving spouse or its equivalent, you’ll want to plan accordingly.

The great balancing act

Longevity is not the only wealth-related challenge many women face. Their financial well-being can also be vulnerable to additional threats as a result of their work/life balance. 

Research suggests that women might end up taking on the heavier load when it comes to child-rearing and household management responsibilities, as well as caring for aging parents. This, in turn, can lead to shorter and/or lower-paying careers. Again, this is by no means universal. But at least traditionally, women’s multitasking talents have often translated into fewer wealth-building opportunities.

Here are six additional areas to consider:

1. Financial stability: Is a woman’s reduced earning power a result of choice or necessity, nature or nurture, biology or biases? Most likely, it’s a muddy mix of all of the above. Financially, however, the results are clear: If you are the “lower-earning spouse” (using the Social Security Administration’s terminology), your circumstances warrant extra financial planning to ensure you maintain an equal stake in your household’s total wealth — upfront, and as you age. 
2. Self-empowerment: Even if you don’t spearhead your household’s asset management efforts, you should still probably be involved in the broad strokes. How much wealth do you have? Where is it (which banks and/or brokerages)? What are your household expenses and debts? Who are your primary financial contacts (financial advisor, estate-planning attorney, insurance agent, and accountant)?  
3. Retirement and healthcare costs: When crunching retirement planning numbers, make sure they factor in how long the surviving spouse (you?!) might live and whether or not you are the primary breadwinner. Ditto as you consider rising healthcare costs, particularly as they relate to securing long-term care.
4. Benefit distributions: Is your well-being considered in planning for any pension and Social Security payouts? For example, if your spouse is thinking of taking their pension in a form that offers higher upfront payouts, but lacks survivor benefits … is that really in both of your best interests? Social Security benefits should be scrutinized in a similar fashion. For example, as described in this article, the timing of when and how a higher-income earner claims their benefits can impact the lower-earner’s eligibility for spousal benefits. 
5. Beneficiary designations: Review your household’s investment accounts, employer retirement plans, life insurance policies, wills and trusts, and similar documents to ensure any beneficiary designations reflect you and your partner’s current intentions. For example, does an old will, IRA, or insurance policy still list an ex-spouse as the beneficiary? Or are there assets that are going to be transferred directly to your children, potentially leaving you at risk? 
6. Communication with advisors: One way you can remain engaged is by being a willing advocate for yourself. Has your financial advisor left you out of the loop when it comes to planning decisions? Does it seem as if they’re not really listening to you, failing to acknowledge you in the conversation, or assigning you a secondary role in the conversations? If any of these are true, it’s probably time to seek advice from a different source. 

Closing the gap

Ultimately, ensuring the protection of women’s wealth is not just about financial security … it’s about independence, empowerment, and closing the gender wealth gap. By prioritizing thoughtful retirement planning, prudent goals-based investing, and pro-active estate planning, women can build and safeguard their assets for themselves and future generations. With the right tools and support, women can overcome the headwinds they often face and achieve lasting prosperity.

Brian R. Littlejohn, MBA, CFP®, CFA is the founder of Sherwood Wealth Management, an independent, registered investment advisor (RIA) firm that specializes in inherited wealth. He lives in Aspen and works with clients in the Roaring Fork Valley and beyond.