Recent surveys regarding women’s attitudes, knowledge and involvement in their financial lives have revealed that women are more interested and informed about money than ever before. In fact,

• 42% of women say they are more knowledgeable than five years ago;
• 64% feel more knowledgeable;
• 55% have invested for their retirement;
• 70% say the more money they have, the better they feel.

However, women remain uninvolved in issues critical to their long-term welfare.

• 80% wished they had learned more about investing growing up;
• 60% do not understand how a mutual fund works;
• Only 35% consider themselves very or somewhat knowledgeable about investing.

A recent AICPA survey showed that American women strongly believe they need to learn more when it comes to managing their finances. Seventy percent of women indicated problems with credit card debt and savings strategies, while 30 percent described themselves as "confident" or as a "risk taker" when it comes to managing their finances.

That means a large percentage of women are not confident when it comes to investment and financial planning. And, they actually have more at risk. Why?

Based on research from some investment companies, nine out of 10 women will be solely responsible for their finances or their family’s finances at some point in their lives.

Women need more in retirement because on average they live longer than men. Currently women represent approximately 72 percent of social security recipients age 85 and older. (Source: Social Security Administration). Unfortunately, women on average make less money than men and spend fewer years in the workforce due to family care giving constraints. The reduced time on the job and unequal earning translate into less money contributed to retirement savings plans.

Avoid Common Mistakes
Women invest later in life and more conservatively. Because women may not be completely comfortable or familiar with some investments, they postpone investment opportunities. These missed opportunities diminish the power of compounding interest on your investments. Ideally, investments should outpace inflation after taxes. A too-conservative approach increases the chances that retirement dollars will be eaten up by inflation.

Women are less likely to participate in the company retirement savings plan. If your employer offers a plan, you should participate, especially if the plan offers a matching contribution. You are never too young or too old to save for retirement.

Women are much more likely to take care of family “wants” before saving for their own retirement. Even regarding education, your children can borrow funds through financial aid or receive assistance from scholarships and work study programs.

Good News
The good news is that women are smarter investors. Based on a study conducted during the mid 1990s by the University of California, women’s portfolios outperformed men’s by 1.4 to 2.3 percent. What secret factors account for this result?

Women spend more time researching their investment choices, according to the National Center for Women and Retirement Research. This process keeps women from chasing the “hot stock” on a whim. Since women are typically not impulsive or over-confident regarding trading, they have the tendency to stay on track with their investments. Women consider the products, services and the ethics of companies before investing.

What to Do Now?
There are many ways CPAs can get involved in financial literacy efforts for women and the general public. First, members can visit the MACPA financial literacy web page to learn about Association-sponsored efforts, including the Accounting Blitz with Junior Achievement, tax preparation assistance with VASTMI and development of financial tools for families in hospice care.

Through the 360 Degrees of Financial Literacy program, sponsored by the AICPA and state societies, members can access free online training, volunteer on a national database and access a variety of resources.

About the Authors
Daniel Yuhn and William Jeffrey are partners at Legatia Wealth Advisors LLC, Troy. Yuhn serves on the MACPA’s Personal Financial Planning and Financial Literacy task forces. Be sure to look for their upcoming articles on specific issues addressed here, as well as practical advice for incorporating these solutions into your practice.

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