7 ways to prepare for the financial challenges women face
Morgan Stanley Wealth Management
01/24/25Summary: Armed with education and a plan, women can feel more confident about their financial goals and how they’ll potentially achieve them.
Women have become a true financial force, controlling more than $10 trillion in U.S. household financial assets. Analysts expect that figure to triple by 2030, thanks largely to the incoming wave of intergenerational wealth transfer from Baby Boomers to succeeding generations.1
With that kind of economic power, women should be on top of their financial lives, but:
- As of late 2023 women had an average of $3,000 in emergency savings, compared to $7,000 saved by men.2
- About a third of women surveyed in 2024 said they did not believe their savings or retirement income 3 would be enough to pay their monthly bills.4
These numbers are just a glimpse to the broad financial challenges women face, underscoring the need for women to actively prepare for their financial future.
The unique challenges women face
Women face unique challenges that often impact our current and long-term financial security. When making important financial decisions, consider:
- Caregiving: Women provide a disproportionate amount of caregiving in the U.S.7 For instance, women may put careers on hold or reduce working hours to care for children and/or aging parents. Much of this labor is not only unpaid but may also lead to a reduction in income.
- Career: Women tend to spend less time in the workforce8 and it can have far-reaching financial effects. In some cases it can prevent participation in company-sponsored retirement plans or a smooth career trajectory and the pay increases that come with it.
- Retirement: On average, women live about five years longer than men,9 meaning many of us may outlive our male partners. This combined with the career interruptions mentioned, may result in many women living longer on less income. It also emphasizes the importance of women being prepared to make financial decisions on their own.
- Investing: Finally, women may not be taking full advantage of the investment opportunities at their disposal, or the potential for their assets to grow, as they are less likely to participate in the stock market.10
What can women do to meet their unique challenges?
Having open, candid conversations with partners and families about care giving expectations and sharing responsibilities is a start. Women can also become even more invested in their financial education, goal setting, and financial planning.
It helps to think about money as a critical factor in achieving personal goals. Thoughtful financial planning can help you pursue your dreams, bring stability to you and your loved ones, and ultimately, meet the obstacles life may throw in your path. It could also allow you to contribute to the causes close to your heart.
That all sounds great, but how do you get started? There are a few basic steps for developing your personal financial plan.
- Define your goals. Some of the things you’ll want to consider are the personal and professional milestones you hope to achieve in the short and long term. You might ask yourself what being financially comfortable means to you. Is it owning a home or paying for college? Even if it seems far away, you should begin to think about what an ideal retirement will look like, whether it’s traveling the world or moving close to your grandchildren.
- Come up with a saving and investment strategy. Keep in mind that it may very well change over time. One way to begin is by becoming educated. For example, take advantage of any financial benefits and education available to you in your workplace, such as 401k matches, financial coaching, or educational programming. Such benefits are on the rise, with more than 70% of employers now offering some financial wellness benefits in the form of education to workers.11 And, if you take on caring for your children or a loved one, ensure that you still have a plan to save, contribute towards your retirement and reach your goals.
- Consider working with a Financial Advisor. It’s a great way to get help and implement a financial plan that takes your specific goals and circumstances into account at each stage of your financial journey.
- Get your family involved. If you have kids, talk to them about money, too. You might discuss values around money, what their definition of success looks like—understanding it may differ from yours—and how they may be able to use their resources to affect positive change. Also get them thinking about important concepts like credit, budgeting and starting to save and invest early. And be sure you have information about and access to one another’s financial documents and accounts, so you’re prepared if something should happen to one of you.
- Prepare for the unexpected: A change in employment, an accident or illness, or the loss of a loved one can take a major financial toll on top of the physical and emotional trauma of such an event. In the short term, work toward building an emergency fund in a liquid account, which could cover at least three to six months’ worth of essential living expenses. If you work in an industry that’s particularly vulnerable to economic downturns, you might consider aiming for even more savings. You can start small and build up this fund over time.
- Prepare your estate: Estate planning may or may not be top-of-mind, but one of the best ways you can care for your family if something were to happen to you is to get your financial affairs in order, no matter how old you are or how much you have. Proper estate planning, such as naming beneficiaries and drafting a Last Will and Testament, can help you ensure that your assets will go to the intended beneficiaries while minimizing both family turmoil and estate taxation.
- Prepare for your health: When it comes to healthcare, plan for the best but prepare for the worst-case scenario. You can do this by making sure your health insurance plan covers the essentials, considering life and disability insurance policies, getting important legal documents in place (including a healthcare proxy and medical directives), and factoring the long-term cost of healthcare into your overall strategy.
Define your goals, start a dialogue with your loved ones, ensure there are plans in place to take care of you if you take on caregiving, and create a game plan.
The bottom line
It’s natural to feel overwhelmed when preparing for life events. But taking control of your finances can propel you in many other areas of your life. You owe it to yourself to define your goals, start a dialogue with your loved ones, ensure there are plans in place to take care of you if you take on caregiving, and create a game plan. The modern face of wealth is female, so walk confidently into your financial future.
Article Footnotes
1 McKinsey & Company. “US Wealth Management: A Growth Agenda for the Coming Decade.” Available at: https://www.mckinsey.com/~/media/mckinsey/industries/financial%20services/our%20insights/us%20wealth%20management
%20a%20growth%20agenda%20for%20the%20coming%20decade/us-wealth-management-a-growth-agenda-for-the-coming-decade.pdf
2 Transamerica Center for Retirement Studies. “23 Facts About Women’s Retirement Outlook.” Available at: https://www.transamericainstitute.org/docs/research/gender-lgbtq/24-facts-women-retirement-survey-report-2024.pdf?sfvrsn=1fb4756e_6
3 National Council on Aging. “American Women Report Economic Stress, Worry About How They Will Afford Future HealthCare Costs in Retirement.” Available at: https://www.prnewswire.com/news-releases/american-women-report-economic-stress-worry-about-how-they-will-afford-future-health-costs-and-retirement-302118247.html
4 Women Tend to Invest More Conservatively Than Men. Here's How That Could Hurt Their Retirement. March 25,2023. https://www.fool.com/retirement/2023/03/25/women-tend-to-invest-more-conservatively-than-men/
7 Bureau of Labor Statistics. “Table 3. Time Spent in Primary Activities for the Civilian Population by age, sex, race, Hispanic or Latino ethnicity, marital status, and educational attainment, 2023 annual averages.” Available at: https://www.bls.gov/news.release/atus.t03.htm
8 Gender Differences in Needing and Taking Leave. November 2020. Available at: https://www.dol.gov/sites/dolgov/files/OASP/evaluation/pdf/WHD_FMLAGenderShortPaper_January2021.pdf
9 Centers for Disease Control and Prevention, “Mortality in the United States 2022.” Available at https://www.cdc.gov/nchs/products/databriefs/db492.htm#section_1.
10 Global Financial Literacy Excellence Center. “Fearless Women: Financial Literacy and Stock Market Participation.” Available at: https://gflec.org/wp-content/uploads/2021/03/Fearless-Woman-Research-March-2021.pdf?trk=article-ssr-frontend-pulse_little-text-block
11 Cerulli Associates. “Only 24% of Active 401(k) Participants Feel Very confident in Maintaining Current Living Standard in Retirement.” Available at: https://www.cerulli.com/press-releases/only-24-of-active-401k-participants-feel-very-confident-in-maintaining-current-living-standard-in-retirement
The source of this article, “Women and Wealth: Planning for Your Financial Future,” was originally published on October 9, 2023.
CRC# 4165986 01/2025
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