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How The Risk-Aware Woman Should Plan Ahead (That’s Almost All Of Us!)

HerMoney Staff  |  October 18, 2022

Inflation. Market volatility. Uncertainty. Risk. As women, we know it's fast and furious. But can we plan for it? Here's how:

Uncertainty and risk are everywhere today. There’s inflation, stock market declines, a pandemic — you name it, there’s a lot to keep us up worrying at night. Women are well aware of risk in our lives, and as such we know that history has a way of repeating itself. A recent HerMoney and Alliance for Lifetime Income survey showed that only 12% of women consider themselves to be risk-averse investors. And when compared to their parents, nearly two-thirds (62%) are bigger risk takers. Meanwhile, over a third of women (35%) feel they’re better equipped to handle risk than their partners.

But here’s the thing: While women are risk aware and even risk accepting, they don’t know what to do about all of it. Do you stay the course or run for the hills? Whether you embrace risk or fear it, the key is to prepare for it. 

“We live in what can best be described as a VUCA world — volatile, uncertain, complex, and ambiguous. Whether it’s inflation, markets, pandemic, or global conflicts, there is uncertainty and risk just about everywhere,” says Jean Statler, CEO of the Alliance for Lifetime Income. “In the simplest sense, preparing for risk is about planning for the ‘what-ifs.’”

And there are  a lot of those what-ifs to think about from employment to retirement. Yes, they’re unique to everyone — and some of them we won’t see coming — but they all need to be planned for. This is especially true for women when it comes to saving for retirement. The gender wage gap and lower savings rates compared to men has put us at a disadvantage; our money has to work harder to catch up. “Each of us has different levels of risk tolerance. Planning for and managing ‘personal risk management’ is something we must learn to do to protect ourselves and our families,” says Statler. 


A financial advisor can be your trusted source of advice, help and support when planning for risk. But if you decide to go it alone, Statler says it’s best to organize your risk in two buckets: short-term and long-term. 

As an example, stock market volatility may be a short-term risk. Let’s say you’re saving to purchase a home, have most of your money invested in equities, and expect to withdraw money from your portfolio to cover a down-payment. If the stock market tanks in the short-term, so does your down payment. Meanwhile, a good example of a long-term risk, especially during retirement, is inflation. If your savings doesn’t  keep pace with inflation, you’ll have diminished purchasing power and/or stand a greater chance of running out of money in retirement. 

Once you can see exactly how your risk is divided into those two buckets, you can better plan for the short and long-term challenges that will undoubtedly come your way.  


Your stage in life and/or age also matter when it comes to preparing for risk, since the amount of risk you can handle can differ from one decade to the next. When you’re in your 30s, the risk of running out of money in retirement is a lot lower than it will be at age 65.  The same goes for inflation. At 35, inflation is problematic but not dire if you manage through it… but at 60, it can mean a lot less money come retirement time and your risk of running out of savings jumps big-time. 

If you’re in your 30s and 40s you’re likely to be less worried about liquidity and volatility. As long as you have your recommended three to six months of emergency cash in the bank, you should be investing aggressively, explains retirement expert Anne Lester. Even if the stock market is selling off, it’s not a time to panic. Rather, try to see it as a potential opportunity to buy stocks on the cheap, says Lester. “If you are young and have emergency savings there’s no reason you shouldn’t keep investing aggressively,” she says. 

If you’re 50+, your risk tolerance changes, and at this point you should have 6 to 12 months of emergency savings in the bank, Lester says. Life typically gets more complicated and expensive as we age. Simply put, there will be kids to put through college and unexpected medical events that can throw your investments and savings out of whack. In addition to stock market risk, there’s employability risk and inflation risk. When all those factors are combined, it can be the perfect storm, when, if left unchecked, could decimate your investment portfolio.

That’s where a diverse basket of investments comes in. The ideal diverse mix should be made up of stocks, fixed income, and a steady stream of income. The latter is particularly important once you’re no longer collecting a paycheck. “To protect against an unexpected early retirement, make sure your investments and other savings are supported with enough protected lifetime income that you’re guaranteed to receive each month from Social Security, pension, and/or an annuity, to at least help cover your basic monthly expenses,” says Statler. “At the end of the day, the best antidote to risk is certainty, and annuities give you certainty.”


When it comes to managing risk, you can’t just set it and forget it. That doesn’t mean you have to rework your portfolio every month, but it does mean you’ll need to remain aware of the many risks out there, especially if you’re retired or nearing retirement, and how it may impact your investment strategy and risk tolerance. That’s particularly true in our current environment, wherein uncertainty rules, and change is constant and happening at a faster rate. All that change means new risk, which may require you to alter your plan. 

“As a financial education organization, we have some easy-to-use tools to get you started in figuring out your risks and if you’ll have enough money to live the life you want. Managing risk is definitely a dynamic and ongoing process. Personal risk management should become a key element in your annual financial planning,” says Statler. “It’s even more critical when you’re within approximately 10 years from retirement.”


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