Women currently control 51%, or $14trn, of personal wealth in the US and are expected to control $22trn by 2020, according to a report by the BMO Wealth Institute that examines the professional and personal strides women have made in the last 50 years.
The report titled financial concerns of Women, details the significant achievements of American women in recent generations, including:
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- They are the primary breadwinners in more than 40 percent of American households, which is an almost four-fold increase since 1960.
- Women now hold the majority (52 percent) of management, professional and related positions in the U.S. Women also own 30 percent of all private businesses, employing more than 7.8 million Americans.
"Women have made incredible strides in the past fifty years and the wealth and power they hold will only increase in years to come," said Mary Jo Herseth, National Head of Banking, BMO Private Bank. "Equality is on the horizon yet many professional women still face obstacles, often stemming from the need to take care of loved ones while trying to achieve professional goals. These challenges that affect women on a daily basis have both emotional and financial consequences."
The report looked at the significant barriers women experience in their personal and professional lives and the impact they have on their finances. For example:
- Women earn only 78 cents for every dollar a man earns.
- The majority of primary caregivers in the U.S. are women (66 percent); 16 percent of female caregivers have taken a less-demanding job, compared to 6 percent of male caregivers.
- Rising health care costs (a 5 percent increase in 2014 alone) also have a disproportionate impact on women, given that they tend to live longer and are generally more proactive about their health than men.
"The unique challenges faced by women make it all the more important for them to find a financial advisor that they are comfortable with, one that understands their challenges and needs," added Ms. Herseth.
The report offers tips to help women achieve financial security:
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By GlobalDataHave a risk management plan: Disability insurance, long-term care insurance and health insurance can all be important lines of defense when unforeseen health issues arise. Establish an emergency fund to ensure you have funds that are easily accessible and sufficient to deal with any unexpected crises.
Save for important goals: Exploring the potential benefits of tax advantaged savings can help you reach your goals faster. Executives and business owners may have the ability to invest through company sponsored 401(k) plans, which reduce the amount of income subject to income tax by making payroll deductions. Self-employed professionals can look into contributing to a Solo 401(k), Traditional IRA or Roth IRA plan.
Plan for your legacy: Having discussions with loved ones can help define how you will be remembered and ensure that your financial assets, as well as your family values, are passed on. Consider teaching your children about financial management and responsibility from an early age and introducing them to your financial professional when the time is right.
