Women and Financial Planning: Two Unique Perspectives

August 24, 2023

Investment Operations and Client Service Specialist

Episode Transcript

Welcome to EWA’s Finlyt podcast. EWA is a fee -only RIA based at Pittsburgh, Pennsylvania. We hope all listeners of this podcast will benefit as we deep dive into complex financial topics that we will make simplified for you.

And we hope that this really serves as a catalyst so that you can make the best financial planning decisions for your family and also save time. Welcome, everybody, to this week’s episode of Finlyt by EWA.

I’m Stephanie Bogdan, COO of EWA. And this week we’re going to discuss a topic that’s actually near and dear to me, which is financial planning and investments, as it specifically pertains to women. We do have some unique circumstances in our lives that kind of make the planning journey a little bit different.

Hi I’m Stephanie Bogden, COO of EWA. I’m joined by our Director of Investments, Jordan Fediazcko who is someone I’ve known for a number of years. And while Jordan and I have worked together for a while, we’re in very different spots in our life, just due to where we are in our career and where we are in age.

So today we’re going to take a look at some of the unique things that face Jordan as she is pretty new into her career and myself about two decades into my career and discuss kind of the nuances of financial planning at these different junctions.

So Jordan, thank you for joining us today. Yeah, glad to be here. Of course. Let’s just dig right into it. Let’s talk about first and foremost, you’re pretty early in your career, graduated from college pretty recently.

At this junction, will you just tell our audience a little bit about kind of where you are in the career path and the things that if you were thinking about financial planning, what would be on your mind?

Yeah, so I graduated in 2022. So not long ago. And I feel right now that financial security to me is being able to provide for myself, be financially independent. And with graduating school, I moved home.

My parents allowed me to move back home. They thought it would be best for me to save money, be able to pay off my student loans. I bought a car, so to make those payments, so that I wouldn’t have to incur other expenses, whether that be rent, groceries, utilities, et cetera.

So that whenever I do move out of my house, I have the ability to either buy my own house and get a mortgage or get an apartment and be able to afford rent and afford everything that comes with it and be able to provide for myself and for a future family.

I feel like it’s very important because I’ve learned so much so far of just getting into this industry and from my coworkers being you, Matt, Ben, Chris, Jameson, and Nick working alongside him. giving me lots of in -depth details.

So it’s nice being able to get advice from experts in the field, as I hope to like be an expert. And also from my family. My dad knows a lot and my mom’s really good with their finances, so it definitely helps having role models.

That’s right, so your dad is in the financial industry. Actually, that’s a funny story because that’s sort of how we came to know one another as he referred you to our previous firm as an intern. So definitely a great background in your family around financials.

But I’ll go ahead and agree with you on the fact that being in this line of work kind of gives you a unique perspective that I think a lot of people don’t have right out of college. They’re kind of not thinking further than this paycheck, this month’s rent, and so forth.

So I definitely think that positions you to be successful very early on in your career. And I think it’s great also that your parents let you move back home. That’s definitely like a leg up. The ability to save either pay off student loans, kind of position yourself for what’s next in life, like in terms of big steps.

Have you so far, since you’ve graduated, have you encountered like any roadblocks or anything that were particularly difficult in like planning out your financial future? Honestly, I think moving home was like the biggest roadblock.

When I was at school, I was fully on my own, independent. And it was great. I like being independent and just not having to rely on others. So that was definitely really hard for the first couple months.

But now I’m so appreciative. And especially too, because getting into this industry, I had to take a series of exams. Right. So starting to work full time, going home, studying. It allowed me to save time by not having to go grocery shopping or do whatever I needed to do clean.

So it’s kind of almost like an extension of being in school to a degree, but a lot more. higher level commitments on your part. Yeah, and I feel like I’ll definitely run into more roadblocks. I’m not sure what they’ll exactly be or look like yet, but making financially responsible decisions aren’t the easiest.

No, absolutely. I mean, and I’ll age myself here a little bit also. So I graduated from college 20 -ish years ago, we’ll call it. And I started out in this field as well, various roles and whatnot. And so I can definitely identify with starting out, you’re learning a lot.

You’re trying to put one foot in front of the other and kind of make all the right decisions. So my personal journey I think is very interesting when it comes to that. So I got out of college, started working as a financial advisor with a mayor prize here in Pittsburgh.

Same thing, a lot of exams, just trying to kind of make things ends meet. I did not move back in with my parents, but I wish I had. So kind of starting in the same place. You know, worked some of the things that like you focus on early on are, you know, getting into your 401K program, making sure that you have like good group benefits, making sure that, you know, you’re trying to create that emergency fund so if something happens, you know, you can continue, you know, you know, with saving and, you know, that financial journey without, you know, taking a step backwards.

And for me personally, you know, I worked in the industry for the better part of a decade before I had a very interesting step. I don’t want to call it backwards, but a change in my life trajectory, which was, you know, pausing, getting married, having two kids and, you know, stepping away from the workforce for the better part of six years.

So that was a super interesting, I think, you know, gear shift for me between, you know, working, working, working, saving, saving, saving, you know, really like forward thinking to saying, okay, now the focus has to shift, you know, from that to being completely different role, like being mom, parent, and then wondering also like, okay, I know I eventually go back to work.

What does that mean for me? And like what type of changes that I have to make like to my financial plan to account for those like six years not working. So we’ll dig into that a little bit more. But I think that’s definitely was a blessing, but it’s also something that you need to plan around.

So we’ll talk a little bit about where your future is going and, you know, how those breaks kind of affect women and whatnot. So, Jordan, let’s dig into the next topic, which is we have some pretty interesting statistics about women in financial planning.

So did you know that women outlive men typically by approximately four years? So US life expectancy as of the last CDC report was 85 for women and 81 for men. So let’s talk a little bit about that. What do you think that means specifically for, you know, women and their financial planning journey?

Yes, so for based off the stats in women living approximately four years longer than males, they have to account for a couple years of retirement on their own. So they have to make sure that they’re prepared in case like that actually comes to fruition in their case, that they have the money to be able to continue to live on their retirement needs.

Right, so I mean yeah you’re talking if you’re, let’s say that you live to be 80, you know, and your spouse passes away at that point, you’re accounting for a minimum of four potentially more years, you know, during retirement in which you need to fund your lifestyle.

And then something also I think we talked about in a previous podcast was that, you know, if you’re married for 40 years, right, you’re being taxed at a married, typically a married filing jointly tax status.

That change is really significantly when you are a widow or a widower for that matter, you revert back to a single person for tax purposes. So oftentimes at some minutes. and not factored in that I think, like, when you cross that bridge when you get there, but that can have a significant impact on how quickly, you know, you’re drawing down funds.

Now, one could also say that, you know, as a single person in your 80s, maybe your spending is going to be significantly less without your spouse or partner present, but there’s still definitely caveats to that.

So second statistic I find very interesting, and we could talk a lot about this as women, you know, in this field, 50 years ago, there were only 5% of women in the workforce who out -earned their spouse.

So fast forward to present, and now that number is 16% in growing. So that means that 16% of women in the workforce are like the breadwinners, primary breadwinners in their household, and are out -earning their partner or spouse.

What do you think about that statistic? That one blew me away. Actually, it’s a very big increase. Yeah, it is a very big increase. I feel like more women are being pushed to continue their education in college and then come out of school and they find their career and just become very passionate about it, and they strive and excel, and they just end up being the breadwinner of their family, and it’s good that more women are going to school and continuing their education.

Yeah, I mean, I’ll speak from, like, you know, personal experience on that, is that, you know, I always knew I’d have a career. I’m fortunate enough to have found a career that I’m exceptionally passionate about and that I intend on, you know, working in until I get to that big bridge of retirement.

But I didn’t know in, like, what capacity it would work, and I didn’t know really, like, how quickly I would get there. So, you know, one of the things I think that has pushed this is that a lot of spouses, a lot of men, partners are getting more comfortable with the fact that their spouse may or may not, like, earn, you know, more than that.

I find a lot of clients we even have where we have husbands, are men who are staying at home and taking care of the kids more and handling some of the more like domestic tasks while their spouse or partner goes out and works.

And so, I mean, in my case, particularly, you know, my husband has a great job, but he is able to work an earlier schedule and have some like very, you know, consistent time where he’s there for the kids after school.

He’s able to do activities. You know, he really like holds down the home front for me. And what that’s done is really just open up like this full world of potential in my career. So I can really, you know, laser focus on everything while I’m here.

Know everything is taking care of that home. And, you know, as a mother, that’s like the biggest weight off of your mind is to know that everything’s okay at home. Your kids are fine. They’re off the bus.

They’re doing homework and you can really concentrate on your career. So I think that has really helped that statistic. And, you know, I’m grateful to have had that in my life so that I can concentrate here at EWA and grow the firm.

So it’s nice that Chuck like is there and supports you in doing that because you’re able to. you’ve excelled so far and it’s gonna keep going. Who knows where you’ll go? And then helping Charlotte with basketball and then you’re able to provide so much for your kids, which is every mother’s goal.

Yeah, I think it’s interesting. Your motivation, when you start out, maybe you can chime in on this too. Your motivation at first when you graduate from school is to really find your niche and figure out what it is that you wanna be when you grow up for lack of a better term.

And then if you have a partner or a significant other, maybe you’re planning that future together. So it’s a you too. So it becomes you and then it’s the two of you. And then as you progress, it might be the two of you plus your kids.

And then eventually it really, 18 years or so down that line, then it becomes you too again. So it’s very interesting as to the life cycle that you go through from single to partner to married to parent and then back to kind of like that emptiness syndrome.

So I’m kind of smack in the middle of that. And I have a step son who’s already left the house. So it’s very interesting how like your financials change, your goals change at times the focus is like solely on the children, but you really need to also then still focus on you because if you wait 18 years down the line to think about your retirement or what you wanna do, you know, with your spouse and the kids are out of the house, you know, you’re 18 years behind.

So definitely focus on all that. Well, let’s move on to one more statistic that I find super interesting too. There’s actually not like a percentage on this, but it’s just a historical stat that women are more likely to take a break.

We talked about this before, take a break from their careers, most likely temporarily to take care of their children and their family. They’re also more likely to later in life take either sabbatical from work or some significant time off to care for aging parents.

So what do you think about that? And how do you think that would impact, you know, the financial planning that, you know, you might be thinking about. thinking about right now? Yeah, I think for a sands and women taking time off for to be a mother, just have to consider, is your partner working?

Do they have the income? And sometimes it is the best option to be a stay -at -home mom because, well, A, you wanna be there for your kids, watch them say their first words, start walking, crawling, et cetera.

But also daycare is just so expensive. So if you can save that money and be able to put it towards something else, whether it’s retirement or college savings, you can do so. So that childcare can just be very expensive.

Well, and I’ll add something in on that as well, that kind of just came to my mind was that I recall act during the pandemic, everything was shut down only 2020, I recall, I was working at home, I’m trading, the market’s crashing of, it’s crazy, it’s March of 2020, but it also had a kindergartener.

a third grader and a seventh grader in my house at the same time, you know, doing schoolwork and whatnot. I was cut. I thought often about like, what would you do if you had like an infant or a brand new baby at that time?

That really changed like the landscape of things. So now like the whole, um, the thought process behind actually having to fully step away from your career in order to be able to continue to, you know, provide for a family or be there or, or mitigate like daycare costs.

That’s probably changed significantly since then because hybrid work is so much more prevalent. I think employers are set up more so to allow for remote work, at least during like a maternity leave or maybe the first two years.

I think that landscape has changed. And I think that’s really exciting because I think that people who consider taking a couple of years off, perhaps they don’t actually have to fully step away and they can continue to progress their career, provide for their family and also feel like that balance between, you know, the professional and then the personal life.

Yeah. That’s nice too, because people are passionate about their job and it can be hard stepping fully out of the workforce and giving up that passion for good reason, taking care of your kids, but that can definitely be challenging.

Right. Yeah. I mean, I wouldn’t change it for the world, but I will note that, you know, when you do step away from the workforce, the facts are, you know, you’re not saving into your 401k. So if you’re maxing out your 401k, you know, this year it’s $22 ,500.

That’s not being saved for retirement. If you have safe harbor match at your employer, that’s another 4% on top of that. So if you compound all of that, you know, at the market, let’s even see you get a 6% average return in the market and you’re doing that every year for five years.

We were talking $100 ,000 minimum of investment plus growth plus compounding. That is a really big long impact, you know, on your ability to retire. So, you know, my thought process always was, well, okay, that’s a trade off between like now and later.

So the solutions when we talk to clients about planning is, be prepared to potentially work longer to potentially start to then, when you come back to work, put your career at the forefront, hyper focus on that, and hopefully have the support of the spouse that we talked about, save more.

So are you going to spend less on luxuries and try to backfill some of that savings? Or are you just more aggressive with your portfolio? If you considered yourself to be a balanced investor, perhaps you need to take on that extra risk to potentially get that extra return for the duration of your career.

So lots of adjustments that kind of need to be made like around that true financial planning concepts, should you take that time off kind of like early on in career. So time value of money is huge in that situation.

So Jordan, talk to me a little bit about, your experience since you’ve, I worked with you before, we worked here at EWA. What do you feel if you could give like our listeners, early on in their careers, so women in your peer groups, somewhere between like 25 and 30, what would be your biggest piece of advice that you’ve like extracted from our work together?

So I feel like starting out, starting to build like good habits with saving is being able to put money systematically away. So whether you don’t have the option, you’re not eligible to get into the 401k initially, you can open up an IRA account or Roth IRA account and start putting whether it’s even like 50 bucks in, just anything, because that compounding interest will add up and it just builds a good habit, whether it’s any type of investment account.

And I mean, I rolled over my old 401k plan into my IRA and my Roth, so that was like a good step for me. And then setting up, I said those monthly investments because it will add up. And then once I’m like paying off my car and a moment’s time with my loans, I’ll be able to put more into that and start hitting those limits.

And then I’ll have an individual account once I’m maxing out my retirement accounts, I’ll be able to put money in there, whether that’s saving for a future house, a wedding, college, just being able to save for my future self, my future family and whatnot.

Well, I would also like tag on to that, that’s amazing and I agree with you completely. I would also note that when you’re starting out, you’re nowhere near like the peak earning years of your career at this point.

So before you get into those like extremely high tax brackets to utilize Roth IRAs, Roth 401ks, if you have that available through your employer is huge. But also, while you’re young, while you’re healthy, hopefully in very good health, to make sure that you get life insurance, just to protect yourself, lock in your good health.

And then honestly, like your ability to work, your ability to earn, hopefully 40 years of work. work that you have ahead of you, that’s like your biggest asset. Your human capital is worth so much. So making sure that if your employer provides like disability coverage, take advantage of that as a group benefit, but then also protecting the rest of that income stream with a supplemental disability policy.

I mean, that’s huge. That’s something that I would note on a personal level also. And going back to the conversation about being the primary or women becoming the primary breadwinner in their household, is that something they don’t think about?

You don’t think about the fact that, well, what if I can’t work, right? And my earnings have exponentially increased over the last five years or so. What does that mean to my family, who like I’m working so hard to support and if I had cancer treatment or I had to have a major surgery, what that would that actually mean if my income disappeared or at least in part to my family?

So seeking out that supplemental policy, I think is really huge as your income increases, making sure that you’re reexamining that at least every couple of years, making sure that you’re completely protected.

is really important, especially when you have young kids in the house. So Jordan, my favorite quote, and I’m going to get your take on this, because I believe I’ve said this to you before. My favorite quote regarding family, parenting, and teaching your kids about finances as well is a Warren Buffett quote.

Although he’s changed his stance on this in the last couple of years, he is quoted by saying, give your kids enough money so that they feel they could do anything, but not so much that they could do nothing.

What do you think about that? I think it’s a great stance. I think personally, if I was a mother, I’d want to give my kids enough that they could do what they want to achieve their goals, find their passion, build themselves a family, but not so that they would just be comfortable not finding that passion, not doing anything to benefit themselves, the world, just be able to take off in their career and their lifestyle.

This is huge for me, because I feel like most people that I know have kids, they always say, well, I want to give my kids a better life than I had growing up, or show them more of the world, and give them advantages and opportunities, perhaps, that you didn’t have, which I completely agree with.

This is my favorite quote, because I think there’s a very logical extent to that, where you provide your kids with enough opportunity that they need to be doing something, they need to be putting one foot in front of the other every day towards something, and that could be college, it could be trade school, it could be starting their own business, not everybody’s path looks the same, but giving them that open architecture and enough to get started on that, and then putting the ball in the air court where they need to keep that moving, that’s kind of where that really speaks to me.

We always all want to provide great things for our kids, and I think life experiences are the things that I focus on with my kids. and the value of hard work. And I think being an example for them of what hard work can provide and showing them that if you are committed, you’re working hard, every day you get up, you’re doing something that you love, find what you love, first of all, that’s a big thing, that that is really like the road to not only being happy and success, but also like being financially fit like now and later in life.

Yeah, and going off what you said, like working hard and being able to provide for your family, that’s something that you should wanna like work for and provide for your family and make those memories.

I mean, there’s like the buzzword of like work -life balance and whether or not you believe that that piece actually exists, there is a balance between I think caring for yourself as an individual or as a couple and looking forward to your financial independence and being able to live your life by design, you know, when you choose to retire or re -choose.

to even partially retire. We have a lot of clients who kind of make that slow transition. Doing that while saving for college. And then something that’s come up for me recently is my parents are getting older.

So here I am, I’m early 40s. I’ve got young kids in the house, step -sons who are more like teenagers, early 20s. My husband and I are saving for retirement. And then potentially really thinking about, well, what would happen if I needed to be of help to my parents?

So there’s a term that we often talk about in this out there. It’s called the sandwich generation. And I’m like firmly in the middle of the sandwich where I’ve got the young kids, myself, and then my parents.

So I think that’s something that women are more likely to take time off or to assist with their parents when they’re aging. So that’s something that I think about quite frequently is how to add that to the balance and make sure that everybody’s taken care of.

So I think it just drives you, though. So I think that you can derive a lot of motivation from that and knowing that how far you’ve come in your career and having a good vision of where you’re going, but then also having actionable steps.

So I think we should close up by just talking about some actionable steps that you and I are doing currently. So I would say my biggest thing is maxing out my 401k, my Roth 401k every year. Although that doesn’t save me.

I’m not putting anything in pre -tax. That’s not saving me taxes now. Having that bucket there when I retire is going to be huge. EWA has a big philosophy around making sure that our clients have seven years of reserves.

And that sounds like a really big number and it is. So it’s something you certainly have to work for. But having seven years of backup and reserves enables you to not worry about the short -term fluctuations of the market.

That takes the stress off of you. You’re not looking at the market every day. I’m not watching the balance of your investments. You know you’re covered. So that just gives you really peace of mind. Even just with personal changes, because COVID, for example, I know some people lost their jobs or there was pay cuts.

So being able to have those reserves makes it easier. to take that time that’s needed, find a solution, and move forward. Well, and you know what’s really funny is, I’ll age myself one more time, is that 20 years ago, I remember as an advisor, we were advising clients to have six months of reserves.

So six months to seven years is like a really big leap, but it’s a very rational leap, and it makes so much sense. And if you don’t have to worry for years versus months, I mean, that peace of mind is just invaluable.

So on top of that, I think like, spending time like we talked about, so many times your kids, while they’re young and in your house, on a previous podcast, Matt and I talked about families, and by the time your kids are 18, you’ve spent at least 80% of the time in your kid’s life that you’re gonna spend with them, and that’s like, just blows my mind.

So balancing, spending time with them, working really hard in your career, cultivating your personal relationships, taking care of yourself, those are all things that I think about on a daily basis. And I think like lastly is, Utilizing debt and liabilities and things of that sort properly.

I think there’s good debt and bad debt. Most people have a mortgage. Most people have a car payment or a lease. But really utilizing debt effectively as a means to a goal is essential. So staying away from credit card debt, revolving debt, things of that nature, if you can, except for purposes of accruing travel points.

And you would have spent that money anyway. So those are kind of my focuses. You know, right now, to make sure that I’m positioning myself for success like now and later. So anything I missed for you, Jordan?

No, I think you hit all the points just trying to save, to put yourself in the best financial position for yourself. So for me, it’s putting myself in the best position now so that whenever I get married, have kids, retire, something happens, I’m able to shift my life in the best way.

The ability to pivot is huge. I think it’s underestimated to have options. So Jordan, thank you so much for sharing. I know it’s like a lot on our personal level. But hopefully, that’s helpful to our listeners.

I know we have a number of clients, number of women clients who are very high earners. They’re providers, parents, spouses, everything. It’s a big role to fill. And we are grateful for them as clients.

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