Women City

Grey Haired Women Handle their Finances Better?

By SiliconIndia   |   Monday, February 18, 2013
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Bangalore: Women tend to encounter several challenges where money is concerned. In general, they outlive their male counterparts, earn lesser wages, and take much more breaks from the workforce in order to look after their children. This ultimately contributes towards their lower lifetime earnings and as an outcome, lower retirement savings and benefits. Studies also show that women tend to perform relatively poorer on financial literacy tests than men do.

But Joanne Hsu, economist at the Federal Reserve Board, in a new study found that women’s financial adeptness starts to take shape as they get older, just when they are more likely to be widowed and need to handle their finances on their own; as reported via Huffingtonpost.com.
Hsu’s study, which is based on a national financial literacy survey of people aged fifty-one and older along with their partners, observed that men’s financial literacy tends to stay at a standard level over their lifetimes or either climax in the middle and dwindle towards the end of their lives. However, women tend to pick up on their financial literacy levels as they and their husbands age.

Hsu cited this trend to incentives: When women are married, their partners usually tend to take over much of the financial management, inclusive of retirement savings and investments. As an outcome, women have little incentive to turn financial pros themselves. Then, when women anticipate potential widowhood, they are driven to become more capable at handling their finances. Hsu suggests, “Widowhood becomes more imminent, The prospect of many years without the couple’s financial specialist creates incentives for women to prepare by acquiring financial knowledge,” she writes.

Hsu also pointed out that women who experience widowhood much beforehand than expected could undergo some hardship as they wouldn’t have prepared for the circumstance by becoming more financially literate. Women who depend on their husbands to manage their money can also suffer if those husbands are not proficient at handling their money. “In this case, merely catching up with their husbands … may not equip women with the tools needed to manage their finances alone,” she notes.

One option for women who don’t feel prepared to appropriately handle money on their own is to gain the support of an adult child or either a financial planner.  But nevertheless, some amount of financial knowledge might be required to avoid scams. As Hsu notes: “A woman with insufficient financial knowledge may find herself in widowhood without a firm understanding of how much she can afford to spend, what her holdings are, or how quickly to decumulate during widowhood.”

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