Winter is Coming. Winter Does Not Care about Your Sex, Gender, Race, Class, Ability to Work, Marital Status, or Anything about You at All. Winter is Coming.
Hi Friendos,
In the late 1990s, I was in college and assigned to read articles published in the Journal of Finance. I had no idea there was such a thing as academic research and the discovery was thrilling. Outside of class, I hoovered up personal finance articles and learned that it was common for a married straight woman to become a widow and not understand the finances of her own household, because her now-deceased husband had handled everything. no no no. “Ok Ladies, we must all understand our money! Our lives depend on it!” In finance class, I learned that researchers found that women were more successful investors than men because they traded less frequently. yes yes yes. “Ok Ladies, let’s get to the investing!” This is how I felt when I was 20 years old.
This week, the New York Times Well column published an article by Claudia Dreifus. Her husband died when he was 96 and she was 81. She faced the impossibly sad situation of returning to an empty apartment where their dog Elvis sat by the door, waiting for their other person to come home. On top of this grief, she also had to grapple with some hard-to-digest information about her financial life:
- Given their age gap, she thought that “widowhood was almost inevitable. On the other hand, we both defied many of the stereotypes about aging.”
- Her husband “had organized our documents so that I could take over.”
- “A call to our financial advisor produced distressing news” that her husband’s pension “died with him.”
- “A phone call to the Social Security Administration produced an additional shock” that her one-person household would receive smaller Social Security payments each month compared to her prior two-person household.
- “The really great news from my financial adviser was that I’ve likely accumulated enough to live at a middle-class standard until the age of 95.”
I was horrified that someone WITH a financial advisor apparently thought she would get the same two checks from Social Security and the same pension check each month. Those monthly checks were significant sources of income for her household, and she did not understand how they worked. Did her financial advisor fail so spectacularly as to not explain this? Did the advisor explain it but not in a way Dreifus could easily absorb the information? Did Dreifus attend meetings with the advisor at all? Were Dreifus and her husband in denial about their own mortality or, like many people, just not very interested in financial matters? Maybe the advisor’s role was only to handle investments, not do comprehensive financial planning. I had so many questions.
Dreifus reflected on her financial situation through a gender-conscious lens: “As a feminist, I’ve long believed that no matter how good the marriage, women need to have their own money,” and then said she had saved into a retirement account in her “own name.” That’s right, there is no such thing as a joint 401k or joint IRA, so Dreifus’ only option for using one was to have it in her own name. Dreifus discussed that “after a lifetime of unequal pay,” longer-lived women often become “economically vulnerable” when their better-paid husband died.
Ms. Dreifus was economically vulnerable before her spouse died; she just didn’t know it.
Women in America do suffer from pay discrimination. So do many, many other groups of people.
After I started working, I quickly lost interest in understanding “women’s issues” in personal finance because I just wanted to understand personal finance. Was someone going to sell me a pink mutual fund? I might be paid less than a similarly situated male, but the existence of pay discrimination did not relieve me of the need to plan for my own life. I didn’t need feminism to convince me that I needed “my own” money because I grew up in a household where money was an instrument of control and the main project of my early adulthood was getting to where neither my parents nor my boss could control me with money.
Now in my late 40’s, I think of financial planning as not about “investing” or “saving,” but about how a person will meet their future needs. Those needs could include medical care for their disabled child, sending money to their grandmother in Vietnam, and/or paying for hair extensions. Cash in, cash out. Investment proceeds, Social Security check, pension check, paycheck, applied to the electric bill, credit card bill, groceries, insurance premiums. And what if: the market tanks, insurance premiums go up, there’s a housefire, I get divorced, my spouse dies? What if…winter is coming? Yep, some bad things will happen. I can’t tell you what they will be, but you will experience some negative financial events in your life.
Fidelity provides lists of “5 things women should consider when retirement planning” and “7 steps to help close the retirement gap.” Argh, everyone should plan for health care costs in retirement, not just women. Everyone should try to maximize their Social Security benefits. I have yet to see one of these marketing articles, aimed at women who have some money, identify an actual financial planning decision or action that turns on sex or gender. Start with the human and their actual circumstances and go from there.
This is not to say personal identity is irrelevant to the project here. Many people find they are more comfortable being vulnerable and asking questions of a financial planner or financial coach that shares aspects of their identity, and having certain kinds of life experiences in common can help quickly build rapport. This matters a lot! If you are paying good money to a “finance person” but don’t feel comfortable asking them questions, get a new person! You deserve to be well supported.
Also consider that whatever systemic issues impact your financial life, your needs are likely best met by following the same financial planning approach as someone not impacted by those issues. Ms. Dreifus took large and significant steps toward financial empowerment, but didn’t take those last few steps for full preparedness. Maybe she saved into her retirement account at work and thought: I am a working woman saving into my own investment account, which is so much more than my mother or grandmother did, job done. What if instead she asked: what does a person (any person) need to do to plan for their financial future? What kinds of bad financial things might happen and how can I still make it in those scenarios?
I was really glad that Dreifus concluded she would be financially ok. I wish she’d known how the Social Security and pension checks worked before her husband died. It’s not that she could have changed anything, but at least she would have known what to expect for her finances. Understanding your money is hugely stress reducing and I recommend it for everyone.
-Stephanie
