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Women Invest In Yourself!
- 1. Ray Castaldi President: Castaldi Financial Solutions Invest In Yourself Women and investing workshop
- 2. Welcome to Invest in Yourself Our Goals To encourage you to share your insight with others as it relates to your financial well-being To help you learn from some real-life scenarios women face To provide actionable ideas to help you establish & maintain your own financial security
- 6. Common Financial Events Saving for college Birth of a child Getting married Buying a home Caring for children/parents Starting a business Relocating Dealing with unexpected changes Childcare/daycare Divorce Inheritance New job Promotion Living alone Working part time vs. full time Now for some real-life scenarios… Making Progress
- 9. Allison’s Story Paying Off Debt Is a Positive 1 Stafford loan in 2008-09 2 www.indexcreditcards.com 10/3/08; www.seekingalpha.com 9/3/08 What would you tell Allison to do? Item Interest Rate Years Car 6.58% 5 Student loans 6.00% 1 10 Credit cards (rewards program) 19.00% 30 2 Savings <1.00% Financial strategies
- 29. Thank You For Attending!
Editor's Notes
- John Hancock Funds January 17, 2011 Invest In Yourself
- John Hancock Funds January 17, 2011 Invest In Yourself Welcome to the “Invest in Yourself” workshop. My name is (insert name and title) and I’m delighted to have you at this event. I have three predominant goals: To encourage you to share your story with others, as it relates to your financial well-being To help you learn from some real-life scenarios women face To provide you with actionable ideas and steps to help you establish and maintain your own financial security At this event, I will share time-tested investment and insurance strategies with you that can help you establish and maintain your own financial security. Additionally, I will encourage you to share your story along the way. Regardless of your age, you have an important story to share with members of your family, women at work and your peers and friends. As we go through this presentation, if you have any questions at any point, just raise your hand and let me know.
- John Hancock Funds January 17, 2011 Invest In Yourself It’s the classic good news/bad news scenario. On the bad news front, for many years now, we’ve been told the generalities that women earn less than men, spend fewer years in the work force, and live longer than men. These are indeed unique challenges that women face. Additionally, a U.S. Bancorp Piper Jaffray study in 2006 found that, when young, many women were not encouraged as much as boys were to learn about managing money, and were less likely than boys to describe themselves as financially knowledgeable or confident about managing money. The good news is that, when compared to men: Women seem to be better at investing¹ 1 out of 3 wives earns more than her husband² Women are more likely than men to participate in a retirement plan³ This information provides women with unique opportunities ¹ Kiplinger.com, December 2006. ² Redbookmag.com, March 2005. ³ Employee Benefit Research Institute, November 2005.
- John Hancock Funds January 17, 2011 Invest In Yourself Part of crafting your own financial story is talking with others, and hearing their mistakes and triumphs. Every woman has things she can learn and things she can teach, about personal finances. Let’s start off with an exercise, an icebreaker of sorts. I’d like to divide you into five groups, and assign each group a question to discuss. I will then call on various members of the different groups to share what their group talked about. Remember, everyone’s experience is different, and there are no right or wrong answers. Let’s start with this discussion exercise. Take 5-7 minutes to prepare one or several answers to the following: [Leader to prompt speaker from each group to recap] Group 1: What is the best financial decision you ever made? What action did you take or not take? Group 2: What’s a financial decision you regret, and what did you learn? Group 3: What is your earliest memory of money and how has that helped or hindered you? Group 4: What are the two biggest financial challenges you’re facing —and who can help you? Group 5: What piece of advice do you have for women who are new investors or new to the workplace? Stay in your groups, and let’s do another exercise, a quiz of sorts. I’m going to assign each group a statement to decide whether it’s true or false.
- John Hancock Funds January 17, 2011 Invest In Yourself Stay in your groups, and let’s do another exercise, a quiz of sorts. I’m going to assign each group a statement to decide whether it’s true or false. #1: The statement is false. Nearly half of all women ages 21-34 live paycheck to paycheck. #2: The statement is false. A study on financial knowledge and confidence showed that 65% of widows give themselves an “8” or better on a scale of “1 to 10” compared to only 40% of married women, 40% of single women and 52% of divorced women. #3: The statement that most women will receive one inheritance in the next 20 to 30 years is also false: most women will receive two inheritances —one from their parents and one from their spouses.³ #4: Eighty-three percent of mothers return to work, and to the same employer, within a year of having a child. Seven in 10 of these women returned to positions with the same pay, skill level and hours worked per week. One primary reason for this is that more women are waiting until they have children and focusing on their careers first. More than a third of first-time mothers are over 30 when they have their first child. #5: The statement that women save for retirement first, their children’s college second is also false: more women put saving for their children’s college ahead of saving for their retirement.” 5 Anything surprise you from these findings? (Take a minute for responses.) ‏ ¹ CNNMoney.com, June 6, 2008, updated October 6, 2008. ² “Women Building Wealth,” www.womenbuildingwealth.wordpress.com, November 20, 2007. ³ Boston College Social Welfare Research Institute, cited in Capgemini/Merrill Lynch World Wealth Report 2004, www.bc.edu 4 US Census Bureau, www.census.gov, February 25, 2008. 5 Ignites, Nov. 27, 2007, www.ignites.com
- John Hancock Funds January 17, 2011 Invest In Yourself In the previous slide, we touched on topics such as saving for college and starting a family that can require a large financial commitment. What are some other life events or common financial needs [Speaker to encourage group to throw out topics] [Encourage audience to throw out responses] [Some responses might be: Going to/saving for college // Starting a family // Getting married // Buying a home // Caring for children/parents // Starting a business // Relocating // Dealing with unexpected changes // Living alone // Childcare or daycare // Working part-time vs. full-time // Divorce // Inheritance // New job // Promotion // That’s great. What we can all see is that there’s a lot to balance, and this is the reality the vast majority of women face, throughout their entire lives. [CLICK] Let’s talk about a few of these in detail with some real-life scenarios.
- John Hancock Funds January 17, 2011 Invest In Yourself Allison Keyes, who at 28, recently finished graduate school and now is working. Allison recognizes the importance real estate has as an investment in her financial security and independence, but is worried about the level of debt she is carrying. [AUDIO: I’ve worked hard, and I finally have a good job. My next goal is to buy a condo, but… should I reduce my debt first? I’m not sure what will have the most impact and benefit me more in the long run. Should I pay off more on my car, eliminate some credit card debt, or start paying down some of my student loans?] Some strategies Allison can employ to bring down her debt are: Paying more than the minimum on her car payment Contacting her credit card companies to negotiate a reduced interest rate, and paying more than the minimum monthly payment Typically the interest rate on student loans is lower than that on credit cards or auto loans. While it can’t hurt to pay more than the minimum monthly payment, Allison will get the bigger impact renegotiating the interest rate on her credit cards, and paying more than the minimum on those and her car payment. By paying off debt, Allison can boost her credit score, thus helping her to secure a lower interest rate on her mortgage. Paying down debt is very important. What are some other things Allison should do? (Take a minute or two for responses.) ‏
- John Hancock Funds January 17, 2011 Invest In Yourself There are so many positive things you can do when you’re just starting out in the workforce to secure your financial future. Let’s spend a few minutes looking at the debt issue and start by considering some troubling realities: Research shows that 47% of single women, ages 21 to 34, carry unpaid credit card balances averaging about $2,000.¹ And the average interest rate on credit cards in the U.S. is 19%.² It’s never too early to begin saving for retirement, particularly if you have the opportunity to contribute at work, through an employer’s 401(k) plan. Starting early, and regular contributions are the key to a more comfortable retirement. As for disability insurance, you may want to consider getting this, particularly if you’re single, or are the primary breadwinner, or have your own business. It protects you and your family if you are unable to work and earn an income by replacing your salary and providing monthly benefits. It’s a good idea to have some money put aside for emergencies, but how much? Typically, you should have three to nine months’ total living expenses set aside. Do you feel totally secure in your job? Are you in an industry where you could easily find another job? Then a three-month reserve might be sufficient. For most people, six to nine months or more is a better goal, especially if you’re the sole or primary earner. Keep the emergency funds in a separate account, where you’re not tempted to use it. ¹ The Smith College Program in Financial Education, 2006. ² Source: Seekingalpha.com, 9/3/08
- John Hancock Funds January 17, 2011 Invest In Yourself As you can see, car loans and student loans typically have lower interest rates than credit cards. It makes sense – if you have to use a credit card at all – to find one with the lowest possible interest rate, and to pay more than the minimum payment. A savings account typically does not have a very high rate of interest, and surely will fall short if that is the sole source for retirement savings. That’s why contributing the maximum to your employer’s plan makes better sense. What would YOU tell Allison to do?
- John Hancock Funds January 17, 2011 Invest In Yourself Action #1: Your first action step is to establish an emergency fund. It’s essential to be prepared for an unforeseen crisis by having emergency funds, that can be tapped quickly and easily, without penalties or restrictions. How much you set aside is typically determined by your living expenses. Typically, you should have three to nine months’ total living expenses set aside. Do you feel totally secure in your job? Are you in an industry where you could easily find another job? Then a three-month reserve might be sufficient. For most people, six to nine months or more is a better goal, especially if you’re the sole or primary earner. It’s smart to keep your emergency fund separate from other funds so you will be less tempted to use it. Action #2: Your next step is to check your credit score, call or go online to one of the three credit bureaus: Equifax, Experian or TransUnion or go to freecreditreport.com. Make sure your report doesn’t contain any errors. Action #3: Create a budget aimed at paying off your debt. If you want to reduce your debt, you can try to negotiate a lower rate. Recently, credit card companies have tightened their lending standards but negotiating a better rate is possible if you have a good credit score. Also, it’s wise to consolidate balances to the card with the lowest rates. Money not spent on credit card payments could be used for: investing more in your 401(k) each month, building up your emergency fund, as well as other investments. Next we’ll hear from Sue.
- John Hancock Funds January 17, 2011 Invest In Yourself Sue Robinson is 34 and newly pregnant. We hear her voice: [AUDIO: “ When we found out we were having a baby, we were so excited. Now that it’s getting closer, we don’t know what to do first. I’m not sure if I’ll want to extend my maternity leave, work part-time, or stay at home. Should we look for a bigger home, start saving for college, or get life insurance?”] These are all important considerations, and can be difficult to decide among them, since they all involve a long-term financial commitment. GROUP DISCUSSION: What are some things Sue should consider? (Take a minute or two for responses.) ‏
- John Hancock Funds January 17, 2011 Invest In Yourself Let’s look for a minute or two at the need to insure for the unexpected. Now that Sue and her husband will have children and will be financially responsible for someone else, they likely need life insurance to provide for beneficiaries, in the event of unforeseen circumstances—such as their death. A rule of thumb is to buy life insurance that is equal to six to eight times your annual income but there are many factors to consider. This includes your income and debts, future income and needs and the protection you want for your loved ones. In addition, learn how a life insurance policy on a woman’s spouse or partner can help provide tax-free income following the spouse/partner’s death. Additionally, Sue is not sure in what capacity she’ll return to work. She may want to discuss flexible work arrangements – such as working from home, telecommuting, or job sharing – with her employer. A 2007 survey by the Association of Executive Search Consultants reveals that 85 percent of recruiters have had candidates turn down a job because it lacked work/life balance. Ninety percent of recruiters believe that work/life issues are more important than they were in 2002.
- John Hancock Funds January 17, 2011 Invest In Yourself In this case, Sue’s action steps are: Check out her employer’s (and partner’s too) life insurance policies and increase coverage/purchase additional policies Look into your company’s policy on flexible work arrangements such as working part-time or from home or job sharing. Continue to contribute to a retirement account. Just because you pause in your career doesn’t mean that your retirement savings should pause as well. Complete a beneficiary review and update your will to add children Consider naming a guardian for your child, in the event you are unable to care for him/her Andrea provides our next case study.
- John Hancock Funds January 17, 2011 Invest In Yourself Andrea Caponi is 45 and newly divorced, and re-entering the workforce after a 17 year hiatus. We hear her voice: [AUDIO: “ I married my college boyfriend at 25 and worked for a few years before we started our family. When the youngest started school six years ago, I began volunteering in the public schools and at our local hospital. Fast forward to now, and my husband and I are in the midst of a divorce. I have the three kids with me most of the time, the oldest of which will start college in the fall. Financially, it’s been a huge adjustment, and I need to go back to work. I’ve been out of the workforce for 17 years now and don’t know where to start.”] GROUP DISCUSSION: What advice would you give Andrea? (Take a minute or two for responses.) ‏
- John Hancock Funds January 17, 2011 Invest In Yourself While it’s true that a woman’s economic lifestyle drops by 27% in the first year after a divorce1, there are certainly several options for Andrea to consider. Analyze tax consequences of asset division: owning the family house may sacrifice women’s share of pension and retirement assets. Secondly, it’s critically important to educate yourself on family finances. You can do this by reviewing bank statements, tax returns, paystubs, cancelled checks and determine a household budget. Knowing where you stand financially can help you prioritize the tasks around getting back in the work force. Finally, you may want to consider an “interim” job. An interim, not-quite-perfect job can assist with bills and the need for benefits. You can start your job search by examining previous work and volunteer experiences and identifying components of each prior experience that you loved and at which you excelled. Find skills that are transferrable. 1 Leslie Bennetts, The Feminine Mistake, 2007
- John Hancock Funds January 17, 2011 Invest In Yourself Andrea might want to do the following action steps: Update beneficiaries, wills, and other documents and records Know where she stands financially to know exactly where the money goes Visit irelaunch.com or read: “Career Track: A Guide for Stay-At-Home Moms Wh Want to Return to Work” by Carol Fishman Cohen and Vivian Steir Rabin Consider freelancing or part-time projects to take catch-up courses to brush up on trends
- John Hancock Funds January 17, 2011 Invest In Yourself Create a resume using resume creation software, available online or at any library. Resumes for relaunched careers should focus on skills and abilities, not just chronological work history. A volunteer position at the hospital might mean: Chairwoman of the fundraising committee that raised $2 million dollars in new funds, a 21% increase Learned how to deal with stressful situations and streamlined forms process as emergency room volunteer Created, funded and launched a children’s story hour for patients in extended care Many, if not all, skills learned are transferable! The next case study we’ll look at is Jenny’s
- John Hancock Funds January 17, 2011 Invest In Yourself Let’s listen to another story now, this time from Jenny Wong, who’s 55 and caring for multiple generations of her family: [AUDIO: My mother was diagnosed with Alzheimer’s two years ago. Recently, she’s had a couple of accidents in her home, so she’s moving in with us – me, my husband, and my two teenagers still at home. She’s still with it much of the time, but her information is in complete disarray. I can barely keep up with her prescriptions and medical appointments. She’s nervous about her money, not sure how much or where it all is. I’m considering leaving my job to care for my mother full time. I’m worried that my mother may have to go to a nursing home.] GROUP DISCUSSION: Has anyone been in a similar situation as Jenny? (Take a minute or two for responses.) ‏
- John Hancock Funds January 17, 2011 Invest In Yourself That’s very good feedback. What are some key things Jenny should consider? What should Jenny do? For starters, if Jenny looked into LTC insurance for her mom, but because of her mom’s diagnosis, age, and recent incidents, the premiums would be too expensive. It’d still be a good idea for Jenny to get LTC insurance for her and her husband. Let’s briefly look at long-term care insurance. As you likely know, Americans are living longer and healthier lives, which is exciting news. The sobering news is that now the greatest financial worry for retirees is living longer than their savings.¹ To help manage rapidly rising health care costs, it’s very wise to consider long-term care insurance before you retire because premiums get more expensive as you get older. Long-term care insurance is an insurance policy that provides benefits to the chronically ill or disabled over a long period of time; appropriate for those 50 or older and reasonably healthy Also, there are adult daycare resources that could help Jenny better manage her time and caring for her mother. www.seniorresource.com is a very good site, providing a lot of information for seniors and their caregivers. ¹ NAVA, The Association for Insured Retirement Solutions, 2008 www.navanet.org
- John Hancock Funds January 17, 2011 Invest In Yourself There’s some very definite steps that Jenny can take. if you’re close to 50, learn about long-term care insurance now when the rates are lower than if you wait until you’re older. If you’re over 50, with, extended care will become an increasing concern as you age so the action you should take is find out about long-term care insurance as soon as possible. Additionally, Jenny would be wise to sit down with her mom while her mom is still cognizant to discuss a variety of topics: such as completing a financial checklist, including but not limited to discussing Power of Attorney options that would enable Jenny to act on her mother’s behalf for such things as banking and buying or selling property, as well as recommending her mom visit an independent financial professional. I stress the importance of INDEPENDENT. The reason being, often times, people with Alzheimer’s get confused and accuse their loved ones of trying to rob them or steal from them – particularly with money and assets. Jenny will want to ensure that her mother has a will or estate plan in place. Before Jenny resigns from her job, she’ll want to look into the requirements around her pension and any vesting regulations for her retirement account Now let’s hear from Ellen
- John Hancock Funds January 17, 2011 Invest In Yourself Now we hear from Ellen, who’s 72, retired, but concerned for her future: [AUDIO: I was a teacher in the public schools for 40 years before retiring with a pension. I was married to my high school sweetheart at 21, and he passed this year, just after we’d celebrated our 50th anniversary. I have my pension as well as my late husband Don’s Social Security, and some stocks and mutual funds. But I worry that it won’t be enough. I’m concerned about the rising price of prescription medications, as well as how long I’ll be able to live on my own for, without assistance. My children are grown, and don’t live nearby, but I’d like to leave a legacy for my three grandchildren, however small it may be.] What advice would you offer Ellen?
- John Hancock Funds January 17, 2011 Invest In Yourself Those are good things for Ellen to think about. Typically, someone at Ellen’s stage of life should consider estate planning and leaving a legacy to heirs, in this case, Ellen’s granddaughters. Estate planning isn’t just about creating a will, and what happens after you die. In addition, you can establish trusts – living or otherwise, set up annual gifts, prompts you to update – or create – beneficiaries, will help you name an executor of your estate as well as establish power of attorney in the event you become incapacitated. Jenny’s very concerned about leaving a legacy to her granddaughters. A recent study from The Hartford showed that on an annual basis, grandparents are already spending over $2000 on their grandchildren and that 65% of grandparents intend to contribute to the grandchildren’s college education. Over half who plan to contribute plan to give $10,000, with a quarter reporting they plan to give more than $30,000. Finally, fully 60% of grandparents believe their grandchildren could benefit from a discussion with their financial professional?1 1 The Hartford, Lasting Legacy, 2008
- John Hancock Funds January 17, 2011 Invest In Yourself Ellen should likely complete the following Be certain that she has a will and estate plan, and that named beneficiaries are up to date. This legal document will protect Ellen’s assets and help reduce confusion and possible conflict over her estate Ellen should review her IRA accounts to ensure there will be no spousal continuation mistakes. For example, if Ellen named her late husband Don as her initial beneficiary, she’ll want to make sure she’s changed that, to perhaps one of her granddaughters. While Ellen plans to leave a legacy for her granddaughters, if they have taxable income, establishing a Roth IRA for them can be a great way to set them on the right track toward retirement Last but not least, Ellen should speak with a financial professional. There are several types to choose from that we’ll touch on in a couple minutes
- John Hancock Funds January 17, 2011 Invest In Yourself Through the shared stories of Sue Robinson, Jenny Wong, Andrea Caponi, Allison Keyes and Ellen Anderson we’ve covered some very important strategies. These strategies are key being able to understanding financial basics in order for women to earn independent livelihoods and lead meaningful lives. We can all benefit from practicing these strategies. The strategies covered today are: Being prepared for emergencies Insuring for the unexpected Reducing debt Creating a will and an estate plan Contributing the max to retirement plans Knowing where you stand Seeking expert advice
- John Hancock Funds January 17, 2011 Invest In Yourself As we mentioned earlier, it’s always the right time to meet with a financial professional. There are several different types of licensed financial professionals who can help you with the financial decisions — large or small — in your life. Some types of professionals are: Financial Consultants – these people can help with investments, retirement and estate planning. Insurance Planners are able to give advice for protecting against unexpected occurrences. Accountants – can offer knowledge of tax issues, and in some cases, investments and estate planning. Finally lawyers provide advice on wills, trusts, all level of estate and probate services, as well as some complicated financial transactions. All of these professionals can offer advice and guide you to what’s appropriate for you and your lifestyle. Through it all, each step you take to secure your financial future is really about investing in yourself.
- John Hancock Funds January 17, 2011 Invest In Yourself By sharing your story, you can share your experiences with others, as well as learn from their stories, and vice versa. You’ll help others succeed in becoming financially successful. Learn from your past mistakes, and others’ knowledge Talk to women you work with and who work for you, in your classes, on your sports teams, and in your groups and organizations Extending your network and sharing your story are mutually beneficial activities Check named beneficiaries to prevent inheritance mistakes Consolidate accounts for ease and convenience Always keep asking, learning and sharing.
- John Hancock Funds January 17, 2011 Invest In Yourself The strategies we discussed today and other important ones are in the 10 Proven Strategies guide. I encourage you to read it and discuss it with (me or your financial adviser). A book geared to women’s finances is Jean Chatzsky’s “Make Money Not Excuses” I also suggest that you find a Web site or sites that you like and regularly use them to gain advice, updates and insight. Here are a few for you to consider: www.wife.org, the Women’s Institute for Financial Education, was the first women-focused site and is now the oldest; they provide a range of information, including online investment clubs. Did you know that all-female investment clubs have outperformed male-only and mixed-gender clubs, and many welcome novice investors.¹ For Boomers, particularly those over 50, there is www.aarp.org, AARP’s site, and two similar, newer sites: Eons at www.eons.com and Boomer Town at www.boomertown.com. You can also find Web sites that focus on helping successful women manage life and work, and they include financial planning and investing resources. One popular site is Pink Magazine at www.pinkmagazine.com. Additionally, it’s important to regularly consult with (me or your financial adviser). This is yet another of the 10 Proven Strategies that can help you on your path to financial independence. ¹ www.wife.org
- John Hancock Funds January 17, 2011 Invest In Yourself
- John Hancock Funds January 17, 2011 Invest In Yourself I would like to open this up to your questions and, before you leave, pass out copies of 10 Proven Strategies . I would like to thank you for attending this event. You’ve been a great audience and I encourage you to meet with (me or your financial adviser) to discuss your individual and unique needs and goals, to keep the dialogue going and, of course, recognize, value and tell your story.