Helping women in their 50s and 60s earn more, save and spend wisely and manage their careers effectively is a passion of mine and the focus of my weekly Next Avenue blog.
What makes it particularly fun, and interesting, is that since I’m in my early 50s, I’m writing for myself and my circle of friends as well as bringing to light issues I believe we can tackle to make things better for the generations of women (our daughters and nieces) following behind us.
As the year winds to a close, I wanted to pass along six takeaways from 2012 about women and money:
1. Women still face big financial obstacles. Sadly, the gender pay gap, women’s financial literacy and their investment confidence have barely budged since I entered the workforce in the early ’80s.
In my blog post, “When It Comes to Money, the Deck Is Stacked Against Women,” I concluded that women don't need a different approach to finances than men, they just have to work harder at it than most men.
Also disturbing: The Gender Gap in Financial Literacy survey by Financial Finesse, a financial education firm in El Segundo, Calif., revealed that women are much less likely than men to maintain a rainy-day savings account. Only 58 percent of women age 55 to 64 overall reported having an emergency fund, compared with 82 percent of men. (For more on this, read my post “Women Need to Get Serous About Emergency Savings.”)
Please be sure to maximize your 2012 retirement plan contributions, assuming you can afford it. If you were 50 or older this year, take advantage of what the Internal Revenue Service calls catch-up contributions. You have until April 15, 2013 to invest $1,000 more in a 2012 traditional or Roth IRA than younger folks, for a total contribution of $6,000. The standard contribution limit for a 401(k) this year is $17,000 but people 50 and older can invest an extra $5,550; you generally need to put the money in by Dec. 31, 2012.
2. Most women in their 50s and 60s still have a deer-in-the-headlights approach to investing. As I noted in “5 Ways Women Can Be More Confident Investors,” many women remain too risk averse.
Although boomer women typically run their household’s day-to-day finances, for some reason that money muscle doesn’t translate into mojo when it comes to investing, according to a 2012 Prudential study, Financial Experience and Behaviors Among Women. Asked to describe the types of investments they prefer, a striking 56 percent of women surveyed said they were interested only in "guaranteed" financial products.
(MORE: How Women Should Plot Their Careers After 50)
My feeling is that keeping your cash in guaranteed financial products is fine for your rainy-day emergency fund, but not for the retirement dollars that need to grow over time. (Returns from stocks generally outpace the interest you can earn on CDs and Treasury bonds over the long term.)
Being too conservative with your money has serious and lasting repercussions. It can mean you won't have enough to live on in retirement, especially when you consider that many older women are solely responsible for their finances at some point in retirement, due to divorce or the death of a spouse.
If you’re an investing novice, I recommend you find a trustworthy adviser. I prefer fee-only financial planners who don't make money from brokerage commissions.
3. Being a mom does not hurt your career. There was a lot of flap this year about how women can’t have it all — a high-flying career and life as a superstar mom at home. But when I interviewed moms I know, I learned that wasn’t the case. They repeatedly told me that being a parent made them smarter about managing their time as well as multitasking, delegating, mentoring, dealing with stubborn employees and prioritizing their work to-do lists. Not one of them said motherhood had held back their careers.
A survey from The Korn/Ferry Institute, a management think tank, backed them up. It found that motherhood can help you get promoted and make you better at your job. I provided details in my post, “Does Being a Mom Help or Hurt Your Career?”
4. Women are more likely than men to help others advance their careers. I was thrilled to discover that conclusion in a report by Catalyst, a nonprofit dedicated to women and business, which surveyed 742 working men and women who had attended full-time MBA programs.
I’m delighted that, when it comes to mentoring, the times are a-changing. When I was younger, I had precious few female bosses willing to help me navigate my career path. My female peers and colleagues tended to have similar experiences. But in spite of those cold shoulders, or perhaps because of them, it seems that our generation is more focused on lending a hand to others (women and men) in the workplace.
Just remember, mentors aren’t just for young employees. Women in their 50s and 60s can benefit from getting colleagues and friends to guide them, too. I have a few mentors — men and women — and they continue to be hugely important to me. You can find more of my thoughts on how and why you should find a mentor in my post “Why Women Need to Be Mentors (or Find Them).”
5. Women are often wimps about asking for raises. In my post, “Why Women Get Smaller Raises Than Men,” I discussed a new analysis by the Institute for Women's Policy Research that found the wage gap is common in occupations virtually across the board. And men are four times more likely than women to ask for a salary bump, economist Linda Babcock of Carnegie Mellon University says.
Many women I know don’t go to bat for themselves when applying for jobs or after they’re hired. They’ve accepted lowball offers as far back as their first job and that has hurt them for decades, since raises are usually based on a percentage of pay.
But you have the power to do something about being paid what you deserve: Negotiate fiercely. When it’s time for a raise or you’re about to get hired, do your homework about salaries. I explained how in my post, “5 Ways Women Can Increase Pay.”
6. Women are more generous than men. That was the conclusion of a study this year from the Women’s Philanthropy Institute at the Center on Philanthropy at Indiana University. And women’s donations are frequently motivated by the desire to make a difference in peoples’ lives.
But I also learned that many women (myself included) should give more strategically and think of themselves as philanthropists. Instead of donating haphazardly, focus your charitable contributions on a few organizations you’ll help year after year and set a five-year philanthropic goal. I offered more advice on this subject in “Six Ways to Become a Philanthropist.”
Now go out and demonstrate your generosity while there’s still time to qualify for 2012 tax-deductible charitable contributions. Your recipients will be grateful and I can’t think of a better way to end the year.
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