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Finance for Women Over 50: How To Reap the Rewards And Avoid The Pitfalls 

Jan Blakeley Holman  |  March 5, 2021

A look at what one CFP over 50 is doing to ensure her financial future is rock solid — and how you can do the same by following her lead. 

By 2028, women will control 75% of the world’s discretionary spending and by 2030 they’ll hold 66% of America’s wealth. Talk about securing the financial future of half the human race.

These estimates are incredible, but not surprising when you look at the numbers. As of the 2019 Census, over 116 million Americans are at least 50 years old, and of that group, 53.7% — 62 million — are women. As the number of women in this age group increases, so does their financial wherewithal in terms of their overall wealth and buying power. 

Now you may be thinking: “Well that’s great for the women of the world, but I’m just one person, how can I ensure I participate in this growing trend and secure my financial future?”  

As a member of the 50+ cohort and a Certified Financial Planner, I have a few ideas on that front. Here’s a look at what I’m doing to ensure a solid financial future for myself — and what you can do, too. 

Build a Cash Reserve For Future Financial Emergencies

All women, regardless of age, need an emergency fund that is accessible at a moment’s notice. The guidelines vary but, on average, most financial professionals recommend an amount equal to at least six months of living expenses.

While women over 50 have been in the workforce for many years, in some ways we are more vulnerable than we’ve ever been. This is particularly true if we are still working and want to remain in the workforce, and it’s more difficult for us to become reemployed if we lose our job. According to 2020 research by the Urban Institute, jobless women aged 50 to 61 are 18% less likely to find new work than those aged 25 to 34, while those 62 and older are 50% less likely to find new work.

The value of an emergency fund became clear last year when many Americans lost their jobs. While we hope we don’t face another global health crisis, an emergency fund provides a cushion for more common events that often create financial stress such as recessions, declining investment markets and natural disasters.

Understand How To Capitalize On Longevity

According to the Centers for Disease Control, the coronavirus pandemic caused overall life expectancy during the first half of 2020 in the U.S. to fall by one year. Despite this development, women continue to hold the longevity advantage with a life expectancy of 80.5 years compared to the life expectancy for men of 75.1 years. As we outlive our male counterparts, one of the reasons the financial outlook for women becomes more positive as we age is because we will take charge of the family wealth. 

Unless you have an underlying health issue or a reason to believe otherwise, it makes sense to assume you will live a long life. To prepare for the future, and to ensure a strong financial future, I recommend shoring up your plan with the following:
– a financial advisor
– current will
– health care directive
– durable power of attorney
– plan to fund possible long-term care expenses

Become Financially Knowledgeable

Financial knowledge is critically important for women to ensure a secure financial future, particularly as we age. Because women live longer, there’s every reason to believe that while we may not be managing the family finances right now, at some point we will likely be responsible for our finances. In order to make good financial decisions, women must understand the importance of financial goals, the characteristics of various investment vehicles and the fundamentals of investing. Surveys tell us that few women are confident when it comes to financial knowledge and you may be one of them. If you feel you have more to learn, dedicate some time to becoming more knowledgeable. Begin by taking a financial literacy test. You can find some financial literacy quizzes online. Here are two of my favorites:

The first one is offered by FINRA, the financial services industry organization. 

The second one is offered by the National Financial Educators Council

Each of these quizzes will give you an idea of what type of knowledge you need to develop. Both of these organizations offer additional guidance and education on financial subjects.

Invest In Stocks to Ensure A Strong Financial Future

Time is an investor’s best friend. Statistics tell us that it’s likely that a woman who’s 50 today will live another 30 years. If she supplements her retirement income with distributions from an investment portfolio, she will need a long-lasting investment portfolio. Stocks are a great choice for a longevity-oriented investment portfolio because they offer the potential to outpace inflation, provide current and future income, and appreciate over time. They’re a no brainer when working on securing your financial future. 

The financial outlook is bright for women 50 and older. But as is the case with many things in life, the woman who prepares for the future—becomes knowledgeable about finance and builds a longevity-oriented investment portfolio that contains stocks—is the woman who will reap substantial rewards to come. 

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The views expressed are subject to change and do not necessarily reflect the views of Thornburg Investment Management, Inc. This information should not be relied upon as a recommendation or investment advice and is not intended to predict the performance of any investment or market. 
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