Financial Guidebook for Women

Transcription

1 EMPOWER, ELEVATE, ACHIEVE: Financial Guidebook for Women Not FDIC insured May lose value No bank guarantee

2 Agenda Women and wealth Challenges and opportunities Financial life stages Action plans 2

3 Women and wealth

4 WOMEN AND WEALTH Women control a significant amount of wealth 51% Women control 51% of personal wealth in the United States Make up more than 40% of all Americans with gross investable assets above $600,000 Represent 45% of American millionaires Will control two thirds of the nation s wealth by 2030 Sources: BMO Wealth Institute, 2015; Forbes

5 WOMEN AND WEALTH The income gap is closing Women s earnings as a percentage of men s, for full-time wage and salary workers, % % Note: Percentages are calculated from annual averages of median usual weekly earnings for full-time wage and salary workers. Source: U.S. Bureau of Labor Statistics, Current Population Survey. 5

6 WOMEN AND WEALTH Longevity matters, and women live longer Average life span 86.6 years 84.3 years Source: Social Security Administration. 6

7 WOMEN AND WEALTH More women today live independently 63% 63% of unmarried individuals, 18 and older, in 2014 who had never been married were women Percentage has risen dramatically since the 1960s and is now at a record high Presents both challenges and opportunities for single women who are planning for the future Source: Census,

8 WOMEN AND WEALTH Social Security won t cover it all Women age earned 79 cents for every dollar earned by men* Median annual income of full-time worker (age 55 64) What you can expect from Social Security ** * Department of Labor, ** In today s dollars. Average benefit retiring at age 65. The maximum Social Security benefit in 2017 for an individual at full retirement age (66) is $32,244. $52,572 Single men $17,600 $40,508 Sources: NWLC calculations based on U.S. Social Security Administration, Annual Statistical Supplement to the Social Security Bulletin, 2014, Bureau of Labor Statistics, Highlights of Women s Earnings in Single women $13,500 8

9 Challenges and opportunities

10 CHALLENGES AND OPPORTUNITIES Caregiving affects career and finances 66% of caregivers are women * 36% of young adults age live in parents home (highest percentage in at least 40 years) * 50% more time is spent providing care than men * 59% of parents provide financial support to adult children no longer in school ** * American Sociological Association. **Forbes Woman, NEFE. 10

11 CHALLENGES AND OPPORTUNITIES Women spend less time in the workforce Women are likely to spend an average of 12 years out of the workforce raising children and caring for an older relative or friend In total, the cost impact of caregiving on the individual female caregiver in terms of lost wages and Social Security benefits equals $324,044 * Family Caregiver Alliance: National Center on Caregiving, February caregiver.org/women-and-caregiving-facts-and-figures 11

12 CHALLENGES AND OPPORTUNITIES Prepare for the challenge If your current annual income is: $50,000 $100,000 $250,000 You ll need to save: $870,657 $1,741,314 $4,353,286 12

13 CHALLENGES AND OPPORTUNITIES Five things that take money out of your pocket Impact of taxes Inflation Low interest rates Health care Procrastination 13

14 CHALLENGES AND OPPORTUNITIES Consider the impact of taxes FEDERAL INCOME TAXES A dollar inside a traditional (pretax) retirement savings account may only provide 60 of income in retirement INCOME FOR EXPENSES 14

15 CHALLENGES AND OPPORTUNITIES Consider the impact of inflation The price of a Coca-Cola in 1940 was 5 cents The present day price of a Coca-Cola is approximately 89 cents Source: NPR, Coca-Cola. 15

16 Low interest rates can pose a risk Historically, when rates rise, they have tended to rise sharply. 8% 7% 6% 5% 4% 3% Periods of rising rate Effective federal funds rate 10-year Treasury yield Prior to the current cycle, there have been three periods of tightening monetary policy in the past 24 years during which short-term rates rose by an average of 3% +1.25% In 24 months 2% 1% 0% +3.00% In 13 months +1.75% In 12 months +4.25% In 25 months '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 12/31/17 Source: United States Federal Reserve, as of 12/31/17. The federal funds is the interest rate at which depository intuitions lend balances at the Federal Reserve to other depository institutions overnight. The effective rate shown in the chart represents the monthly average of the volume-weighted median rate of overnight federal funds transactions. Past performance is not indicative of future results. 16

17 CHALLENGES AND OPPORTUNITIES Health-care costs are significant Health-care costs have outpaced earnings and inflation over the past 15 years Costs are expected to grow significantly in the future Health-care spending increases significantly with age Health insurance premiums 213% Worker s earnings 60% Overall inflation 46% Source: Kaiser Family Foundation, September

18 CHALLENGES AND OPPORTUNITIES Put time on your side by starting now The power of time and discipline This example assumes an 8% annual rate of return. This illustration is intended solely to demonstrate the comparative effect of compounding on current versus delayed investments. It does not reflect the actual return on investment, which will fluctuate with market conditions. Regular investing does not guarantee a profit or protect against loss in declining markets. Withdrawals from an IRA may be subject to income taxes and certain penalties. All funds involve risk, including the loss of principal. 18

19 CHALLENGES AND OPPORTUNITIES Start investing, stay invested $100,000 invested in the S&P 500 (6/30/02 6/30/17) By staying fully invested over the past 15 years, you would have earned over $160,000 more than someone who missed the market s 10 best days. Data is historical. Past performance is not a guarantee of future results. The best time to invest assumes shares are bought when market prices are low. 19

20 Financial life stages

21 FINANCIAL LIFE STAGES Single young females: Millennials ISSUES/CONCERNS Starting and monitoring retirement and savings plans Making sure asset allocation is age appropriate Debt management Disability insurance Tax awareness Emergency fund or large purchase savings (home/car) Health-care proxy SOLUTIONS Consider Roth IRA Systematic investing Health savings account Knowing basics of IRA rollovers Paying off debt Deduction awareness 21

22 FINANCIAL LIFE STAGES Established professional: Retirement and legacy planning ISSUES/CONCERNS Optimizing Social Security Medicare eligibility Guaranteed retirement income Estate/Legal planning Charitable gifts College savings for Next Gen Account consolidation Retirement Tax-smart withdrawal SOLUTIONS Annuitization Legacy planning 529 Plan Social Security decisions Tax-free investing 22

23 FINANCIAL LIFE STAGES Working mother: Child care, insurance, college ISSUES/CONCERNS Childcare Charitable giving College savings Insurance coverage SOLUTIONS Annuitization Legacy planning 529 Plan Social Security decisions Tax-free investing 23

24 FINANCIAL LIFE STAGES Retirees: Distribution and wealth transfer ISSUES/CONCERNS Insurance coverage Accumulation to distribution phase Estate planning Deferred compensation Financial doc organization Charitable giving College savings Wealth planning (will, health-care proxy) Long-term care SOLUTIONS Umbrella liability insurance 401(k) income optimization Implement estate plan Income planning Financial plan organization Gifting 529 Plan 24

25 FINANCIAL LIFE STAGES The financial impact of disruptive life events ISSUES/CONCERNS Protecting income Beneficiary designation Long-term care Managing alimony/child support Tax considerations Health-care concerns SOLUTIONS Fixed-income investments Life insurance 25

26 Action plan

27 ACTION PLAN Consider a bucket approach to manage income in retirement SHORT-TERM INCOME (0 2 years) MID-TERM INCOME (2 10 years) LONG-TERM INCOME (10+ years) Meet immediate cash-flow needs, emergency fund, etc. Cash CDs/money market Short-term bonds Immediate annuities Social Security, pension income Wages Mix of growth and income, replenish short-term bucket, guard against market volatility Bonds Deferred annuities Absolute return funds Asset allocation funds, balanced funds Inflation hedge, address longevity risk Balance of stocks/bonds Real estate Commodities Longevity insurance 27

28 ACTION PLAN Put your plan into action Take inventory of your financial goals Work with a qualified financial advisor Do not procrastinate feel empowered by your financial future and pay yourself first 28

29 All funds involve risk, including the loss of principal. This material is for informational and educational purposes only. It is not a recommendation of any specific investment product, strategy, or decision, and is not intended to suggest taking or refraining from any course of action. It is not intended to address the needs, circumstances, and objectives of any specific investor. Putnam, which earns fees when clients select its products and services, is not offering impartial advice in a fiduciary capacity in providing this sales and marketing material. This information is not meant as tax or legal advice. Investors should consult a professional advisor before making investment and financial decisions and for more information on tax rules and other laws, which are complex and subject to change. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. For a prospectus, or a summary prospectus if available, containing this and other information for any Putnam fund or product, call your financial representative or call Putnam at Please read the prospectus carefully before investing. putnam.com 29

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