I'VE BEEN PONDERING: Being a Woman is Expensive!

Women face myriad financial challenges. Have you read the endless articles about the gender wage gap? And the time women take out of the workforce to be caregivers? Oh - and our longer life expectancy?​

Less frequently discussed is the fact that life actually costs more for us! A recent article from HerMoney states, ”the truth is, it’s expensive to be a woman. Much more expensive over the course of our lifetimes than it is to be a man. Many of these costs are baked into our economy, our societal norms and expectations — even into our healthcare costs.” (Did you know that lotion marketed to women costs as much as $1 more ​per ounce than that marketed to men?!)

If we make $324,000 less on average over our lifetimes and have over $300,000 higher lifetime expenses - what's a girl to do?!

To me it strongly reinforces that we need to be even more intentional about building our financial foundation for long-term security and self-determination! Does that mean we can’t have nice things? Absolutely not. But it does mean that we need to be extra conscious of the trade-offs of our money decisions, and mindful of being kind to our future selves by building financial assets and net worth.

TIMELY TOPICS: Taxes in Retirement

In this time when inflation is higher and the prognosis for the economy is uncertain, it’s wise to be mindful about where our dollars are going. One expense we all face is income taxes. (What’s that quote about death and taxes?)

However, we can be smart about the timing of our taxes, especially when it comes to retirement accounts.

Here's a quick taxation refresher: the majority of workplace retirement plans (401(k), 403(b), 457(b)) and Individual Retirement Accounts (IRAs) are tax-deferred. (If it has the word ROTH in the title, it’s different.) That means you received a tax deduction in the year(s) you contributed to the account, and you’ve put off the day of reckoning with the IRS until you take withdrawals. If you inherit an IRA (regular, not Roth), the original owner got a tax deduction, and you as the beneficiary will need to pay the income tax.

While tax-deferral is attractive, and can help you to save more for retirement, lots of women face a ticking time-bomb of future taxation. For many retirees, their largest assets by far are their home and their retirement accounts. The traditional advice is to defer taxes as long as possible, because "of course" you’ll be in a lower tax bracket in retirement. Many people try not to touch their IRA’s until required to by IRS rules (previously age 70.5, then 72, moving up to 73 this year, and eventually 75 in 2033).

But what if tax rates increase?

In fact, the current tax brackets are set to sunset at the end of 2025. Unless Congress changes the rules before then, tax rates will go back to where they were before 2017.

What to do instead? Plan and be intentional. (And check out our episode on income taxes.) Pushing off retirement-plan withdrawals as long as possible is not always best. Knowing not only what your assets are but how and when they will be taxed is part of smart planning and making the most of what you have.

RECENT/UPCOMING SIGHTINGS

1. Want to know why the phrase Financial Literacy makes me so mad?
2. The Philly chapter of Ellevate Network has a monthly Podcast Club, and in March I will be the guest! Join us as we discuss "What's Your Number," our most-downloaded episode to date.
3. I spoke on a recent webinar for the Real Estate InvestHer community on "Holistic Wealth Building for Women in Transition. You can watch the full replay at the link.
4. Over on the Take Back Retirement pod, we did a recent episode on preparing for a possible recession, plus one on the new retirement plan rules in the Secure Act 2.0. As ever, we strive to cut through the noise and give you just what you need to know!
5. We're getting closer to the release date for More Than Money, the book I helped to author. For our readers we have an exclusive Free Book Offer - if you buy one, we'll send you another to share!

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Let's Connect!

What's your favorite, or rather most enraging, example of the higher cost of being a woman? Let us know by replying to this email, and we'll share some on social media!

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