EnTrends

Given that women earn approximately 30% less than men in

annual earnings it is surprising to learn how few women are

prepared for retirement. It would seem as if women do not

have the same training and expectations as men when it comes

to money.Do women have a "fairy tale" relationship with

money? Deep down do we believe that a white knight will

ride in at the last moment and save us from financial

disaster? Sadly, according to numerous statistics, this

would appear to be so.

- Older women's income from all sources at retirement is 70

percent less than men's.

- 80 percent of all widows in poverty become poor only after

their husbands die.

- Divorced older women have a higher poverty rate than

widows of the same age.

- Only 14 percent of white, 10 percent of black, and 8

percent of Hispanic older women received pensions in 1994.

- The average annual private pension for retired women is

$3000 compared to $7800 for men.

- In 1995, the average woman earned 71 percent of the wages

a man received for the same work, and between ages 55 and 64

that drops to 65 percent.

- Minority women have the highest wage gap. Black women

earn 64 cents of the dollar a white man earns, Hispanic

women earn 53 percent and white women earn 71 cents.

Source: University of California's Institute for Health &

Aging

That is not all. Women save later and we save less money.

We also tend to invest later and invest less. According to

a survey conducted by Merill Lynch, only 26% of female baby

boomers are saving for retirement versus 43% of males in the

same age category. Those women who do save manage to put

away 40% to 50% less in retirement and investment accounts.

Other alarming statistics show that while women on average

earn 26% less than male workers for doing the same job, we

are less likely to have a pension plan, and we typically

spend 12 years away from the work force to raise children,

take care of aging parents, etc. So, not only are we

earning less money, we have less time in which to

earn it.

Women are typically good with household budgeting because
itis something that we deal with everyday. The stock market,

on the other hand, is a whole different world. Women tend

to shy away from the stock market because they think it is

too risky. According to experts, women feel more comfortable

putting their money in "safe", low-risk, fixed investments

like IRA's, 401-K's, money market mutual funds, and CD's,

which are all vulnerable to the eroding effects of

inflation. However, a degree of risk is necessary in order

for our money to grow. What to do? We need

to bite the bullet and learn how to invest our money more

aggressively, specifically in the stock market.

The good news is that women are joining investment clubs
andthese female investment clubs are outperforming male

investment clubs. Why? Because women have a lower risk

tolerance, we are more likely to engage in greater research

and planning of our investments. According to Salomon
Smith Barney, a leading investment firm, women investors
deal with risk by studying the company profiles of market
leaders in areas that they can relate to in their everyday life,

education and women's health, for example. In other words,

women tend to get emotionally involved, making it more

meaningful, and are thus making sense of the stock market.

Your Financial Future

Most families have 3 major financial goals: setting aside

anemergency fund equal to 3 month's living expenses, saving

money for their children's college education, and putting

money into a retirement plan.

Smart Saving

The keywords here are safety and liquidity. This is your

cash portfolio and you want this money to be available to

you sooner rather than later. Besides the traditional

savings account,other good saving vehicles (which earn a

higher interest rate than a savings account) include:

Series EE Savings Bond - a 30-year security that

accrues interest until it is cashed or reaches final

maturity. The purchase price of the Series EE is half the

denomination or face value and denominations range from $50

to $10,000. However, you are limited to buying $30,000

(face value) of this type of bond per person per year.

Money Market Account - a highly liquid account offered

by banks or brokerages that requires a minimum deposit of

$1000, a minimum monthly balance, and limits withdrawals.

Money market accounts are not investments per se.

Money Market Mutual Fund - a fund purchased directly

through mutual fund families or through a mutual fund

"supermarket". Each fund sets its own minimum investment

amount but are typically higher than $2500. A money market

mutual fund may or may not offer check-writing privileges.