Good morning SOTGC readers. A huge thank you to Bridget Venus Grimes for this guest post. I asked Bridget to write this post because I have noticed that very few people my age seem to be planning for their retirement, and even fewer seem to have a financial advisor.
When I was in college one of my best friend’s father told me that if I invested 10% of everything I ever made while working, that I could retire a multi millionaire. That sounded and still sounds like a fabulous idea, so I took that advice to heart. Along with that I have taken my parent’s and Grandfather’s suggestions on always paying off my credit card balance each month, never over extending myself financially, and creating a diversified portfolio so that when one market dips, there is always another investment to counteract that decline.However, it amazes me how many women and men do not have 401Ks, IRAs (if they qualify) or fixed assets that can later be used as investment properties. Part of me wonders why this is, and I think the answer might be that they just aren’t educated enough on the importance of starting at a very young age. Below is Bridget’s advice on who needs a financial advisor, why, and when to get one.
I meet quite a few women in the course of business who are accomplished, successful, and very intelligent. These are busy women, many have children, many are single, many are the primary breadwinners for their family, and in many cases, are trying to handle the responsibilities of business and family on their own.
I want to impress upon you why it is so very important for working women, juggling so very much, to have someone help them with their wealth management.
The financial situation for women is different now than in the past. While many of us are earning more than women have in the past, we are also responsible for more expenses than ever before. Statistics show that in many cases, we will outlive our spouse. Most of us do not have pensions. Many of us do not have a spouse or partner with whom we can share expenses and savings. We might have taken time off from work to raise children, which may result in decreased retirement savings, decrease in income, and a very different trajectory in our careers.
What all this means is that unless we women have a plan to prepare for retirement, we will not have enough money to retire, and certainly not enough to maintain a lifestyle we’d like.
I sit down with women on a regular basis who are in their 30s and 40s and are earning a substantial amount. They have a good lifestyle and can afford what they’d like. Things are good. For now… Oftentimes, these women have very little saved for retirement. We talk about how they’d like their retirement to look down the road, in their 60s or even 70s. I can tell you that this is not a pleasant discussion. In many cases, I must tell these women that they will need to work much longer than they would like in order to maintain their current lifestyle. Or they will need to drastically alter their lifestyle in order to avoid running out of money. This conversation would be very different if early on in their working life they had a plan.
If I could turn the dial back for these women to their first job in their early 20s, I would implore them to meet with a wealth manager. They would discuss life goals, what is important to them, what keeps them up at night, and they would pencil out a plan on how to reach those goals. Often this is as simple as cash flow analysis, a good snapshot of their assets and liabilities, and a basic financial plan. And most importantly, sticking with that plan. As one client told me, a good part of our relationship is holding her accountable to her plan. But, as life becomes more complex and children and spouses enter into the picture, the plan evolves. Priorities need to be made in order to reach your goals.
I met with a client recently who is considering buying a house and is currently renting. Our discussion covered her different options and how each would affect her retirement goal. Should she buy a more expensive home with higher monthly payments, but that required a lower down payment, or should she buy a less expensive home, put down more money and have less to invest now?
As the financial advisor, my job is to determine how my client can pay for her goal with what she has to work with and make sure that the decisions that are made make the best financial sense. In this case, we put together a savings plan to help her reach her goal without causing her to sacrifice her lifestyle all that much.
We also made sure that she could still contribute to her retirement plans. This client is a textbook example of why planning is so important. As a single, working mother of one young energetic son, she is the only person in her life that she can rely on to help her fund her retirement, or any other expense in her life. There will not be a pension for her at retirement, and I’m not so sure there will be social security either. She must be completely self-sufficient. While that may seem a bit daunting, I have absolute confidence that she will reach her goals. By working together to formulate a plan of action and maintaining accountability, I believe she will be just fine.
I am a firm believer that the sooner you start working with a wealth manager, the better. This isn’t something that only the wealthy do, or that only husbands do. This is something that we women of all ages and all degrees of wealth need to have in our lives the way we have a doctor, dentist, and accountant. Because your future is at stake, the sooner you start on a plan, the greater the chance you will be successful.