The Bank of Mom might be the easiest place to go for a loan or outright grant, but research indicates that women need to take better care of their own financial needs before helping their children and grandchildren.
“Women tend to consider the financial needs of their children and grandchildren to be equal to or more important than their own financial interests,” said Catherine McBreen, president of Millionaire Corner. “This strategy comes naturally to many women, who tend to be the primary caregivers in a household, but it can lead to serious shortfalls in retirement. It may be time to reassess the Bank of Mom mentality.”
Women on average earn less over their working life then men do, according to the nonprofit Women’s Institute for a Secure Retirement or WISER, and are more likely to pause their careers or cut back to part-time work to take care of their children and aging parents.
“Women earn 77 cents on the dollar compared with men, and they’re less likely to be covered by company retirement and pension plans,” according to Beyond Today, a Wells Fargo website designed to help women prepare for retirement.
The lost wages and retirement benefits, missed opportunities for promotions and lower salaries all reduce a woman’s ability to save, said WISER. As a result, many women enter retirement with scant funds, even though they are likely to outlive men. (Above age 90, women outnumber men 4-to-1.)
“Put all of this together and it is no surprise that women are twice as likely to end up living in poverty in old age,” according to a WISER blog.
While women tend to pay the bills and manage the family’s day-to-day budget, most leave the “very important financial responsibility” of investing to their husbands, including funding and monitoring retirement accounts, said WISER.
“For many women, the road to poverty begins after their husbands pass away,” said WISER. As women age they face an increasing likelihood of becoming poor. Nearly one-third of single women over age 75 are living in poverty. Divorce can also reduce a woman’s financial security, said WISER, noting the average women sees her standard of living drop as much as 30 percent after a divorce.
In comparison to men, women consistently show a higher level of concern over the financial situations of their children and grandchildren in Millionaire Corner studies of the attitudes and behaviors of wealthy investors.
“Personal concerns drive many financial decisions for women,” said McBreen, “and this can lead to the potentially detrimental Bank of Mom mentality.”