Women & Wealth

There are many reasons you might wish to approach financial planning a little differently. As a woman, you can expect to live on your own financially a third of your adult life, so it simply makes sense to educate yourself on how to manage wealth wisely. Of course, we’re here to help you establish a plan designed to help ensure your financial future.

As with all our clients, we’ll begin by listening, getting to know you and your family’s specific situation. We understand that women at different stages in life will have very different goals, and we’re more than capable of creating and maintaining a financial strategy that makes sense for you.

If you should find yourself suddenly single, we can offer a voice of reason to help you adjust to your new situation and move forward. This allows our clients to navigate through the emotional turmoil brought on by the loss of a spouse, whether through divorce or death. With care, support and guidance – even a shoulder to lean on – you’ll gain new confidence as you take control of your financial well-being.

We also recognize that successful women – business leaders, entrepreneurs and professionals – are often at the peak of their careers, earning more than ever before. With wealth comes responsibility – planning and positioning for a financial future for yourself, your business and your children. We know, too, that college tuition rises every year, and many parents want to secure their children’s education without sacrificing their own goals along the way.

Stay-at-home moms have their own set of challenges, particularly when it comes to saving for retirement. Just because you’re not contributing to a 401(k), doesn’t mean you’re not contributing in a different way by managing the household, budgets and debt. It does mean, however, that we’ll need to be diligent about saving and investing for the next stage of your life, perhaps in a dedicated traditional, spousal or Roth IRA. The time to start planning is now.

As you near retirement, the focus will shift to a different set of considerations, including how to maximize Social Security benefits, withdrawal plans for your accumulated assets and more. In short, no matter what you’re going through, we can help.

To us, each situation presents an opportunity to make smart, pragmatic financial decisions to manage all you’ve worked so hard for. We understand the unique position you’re in, and we’re here to help you become educated and empowered when it comes to your wealth. Our knowledgeable, experienced advisors can get you started. Please contact Amanda Piper to learn more about how we can address the financial challenges you face and answer any questions you may have. In the meantime, review the resources below for more information about women and managing wealth.

I’m about to get married. Should I adjust the asset allocation in my 401(k) to take my husband’s investments into account?

That depends on several factors. Perhaps the first step is to make sure your existing asset allocation is appropriate for your circumstances; if you haven’t reviewed it in several years, you should probably take a fresh look at it, whether or not you intend to consider his assets in your investing strategy. Assuming your allocation is appropriate for your current situation, you may want to make sure that any overlap between your accounts doesn’t create a portfolio that’s too heavily concentrated in a single position. For example, if you have received company stock as part of your compensation plan for many years, you might not have enough diversity in your portfolio; if both of you have worked at the same employer, the problem could be even worse.

However, you don’t necessarily need to make dramatic changes right away. No matter how compatible you might be, marriages have been known to fail, and sometimes they fail in a shorter time frame than anyone ever expected. If you do decide to make adjustments, remember that you can phase them in gradually to create an asset allocation strategy that includes both portfolio. For example, you might decide to simply allocate new money to a different investment or asset class rather than shift existing assets.

Explain to your husband why you’ve chosen to invest as you have; you may have a perspective he’s overlooked or information he hasn’t considered that could be helpful even if you manage your portfolios entirely independently. And since it’s your account, you have the final say. If there’s a difference in your investing philosophies, a neutral third party with some expertise and a dispassionate view of the situation may be able to help work through differences; that can be especially valuable in cases where substantial assets are at stake.

Any opinions are those of Amanda Piper and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Should I be investing more aggressively?

There’s no way to know the answer to that without reviewing your individual circumstances and financial goals. However, if you are investing too conservatively, it can have a profound effect on your long-term financial future. That’s particularly true for women. According to a U.S. Department of Labor study (“Women and Retirement Savings,” October 2008), women often start saving later, save less, and invest more conservatively than men, which decreases their chances of having enough income in retirement.

How you should be investing depends on many factors, such as:

  1. How able are you to tolerate risk?
  2. How soon do you hope to achieve your financial goals?
  3. How much will you need to save for important goals such as retirement?
  4. What rate of return would you need to try to reach your goals?
  5. Is income, growth, or safety most important to you?

If you wonder whether you’re invested appropriately, the first step is to get some answers to those questions. You don’t have to become a financial expert to develop a solid investment plan. Even many highly paid executives are often uncertain when it comes to money questions, and seek out help from a financial professional who can help answer those questions.

Reluctance to invest in the stock market is often the result of financial illiteracy, according to a 2010 Library of Congress study prepared for the Securities and Exchange Commission (“Behavioral Patterns and Pitfalls of U.S. Investors”). If that’s true for you, becoming more knowledgeable about investing basics and working with someone who can show you how they apply to you is the first step toward having a sound financial plan.

Any opinions are those of Amanda Piper and not necessarily those of RJFS or Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

My husband is about to receive his pension. We’ve heard of “pension maximization.” What is it?

If your husband is participating in a traditional pension plan (also known as a defined benefit plan), his benefits must normally be paid in the form of a “qualified joint and survivor annuity” (QJSA). A QJSA is an annuity that pays a dollar amount (usually monthly) to your husband while he is alive, with at least 50% of that amount continuing to you after his death, if you survive him.

However, if you consent in writing, your husband can waive the QJSA and elect instead to receive a single-life annuity. With a single-life annuity, payments are made over your husband’s lifetime but stop upon his death. For example, if your husband receives just one payment after retirement and then dies, the single-life annuity would end and the plan would make no further payments.

So why would you agree to waive the QJSA in favor of a single-life annuity, knowing that payments will stop at your husband’s death? The main reason is that the single-life annuity generally pays a significantly larger pension benefit than the QJSA. That’s because the payments are designed to last for a smaller number of years–one lifetime instead of two. Pension plan participants who want to maximize their monthly retirement income are often tempted to choose the single-life annuity for this reason. However, most pensioners are also concerned about providing for their spouses if they should die first.

“Pension maximization” is one technique for solving this dilemma. The way it works is that your husband elects, with your consent, to waive the QJSA and receive his pension benefit instead as a single-life annuity. You and he then use the additional pension income to purchase insurance on his life, with you named as beneficiary. If your husband dies first, the pension payments will stop, but you’ll receive the life insurance death proceeds free from federal income taxes. The idea is that by coupling the larger pension payments with the purchase of a life insurance policy on your husband’s life, you and he may be able to increase your total income during retirement, while also providing for your financial future if your husband dies first.

Is pension maximization right for you? There are a number of factors to consider. Is your husband insurable? If not, pension maximization is not a viable strategy. How much will the life insurance cost? (If your husband is relatively young and in good health, the insurance premiums may be much more affordable than if he is older and/or in poor health.) How much more does the single-life annuity pay than the QJSA? The larger the benefits under the single-life annuity, the more income you’ll have to pay the premiums for the life insurance policy. (Also make sure to factor in any cost-of-living adjustment the pension plan may provide when analyzing your payment options.) How healthy are you, and what is your life expectancy? What are the tax consequences? (Death benefits from life insurance are free from federal income tax, while pension benefits are typically fully taxable.) If your husband dies first, can you manage a large lump-sum payment?

The pension maximization technique is not for everyone, but could be worth considering as you and your husband evaluate his pension benefit options. (Note: Any guarantees associated with payment of death benefits, income options, or rates of return are based on the claims-paying ability of the insurer. Policy loans and withdrawals will reduce the policy’s cash value and death benefit.)

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Amanda Piper and not necessarily those of RJFS or Raymond James. You should discuss any tax or legal matters with the appropriate professional.