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To All The Single Ladies: Plan Now For Your Financial Future

Sharon Epperson, Financial Planning

With Sharon Epperson, CNBC Personal Finance Correspondent

Sharon Epperson, CNBC’s senior personal finance correspondent and frequent guest on Today and NBC Nightly News, discusses with Steve the topical issue of women and financial planning.

Sharon recently co-authored an article “All The Single Ladies, All The Single Ladies Start Planning Now For Your Financial Future,” which addresses this important topic.  Beginning with the startling statistic that about 40% of unmarried women have been able to save less than $1000, Sharon offers some straightforward advice that all women should heed, no matter their age.

It’s well-known that women make less than men pretty much across the board in our society, which, in itself, is appalling, but couple that with the fact that less income earned in a lifetime also means less social security benefits upon retirement. This inequality in pay can be attributed not only to employers and the lack of transparency in the workplace in terms of what other employees are being paid, but, to a degree, to the women themselves who perhaps aren’t comfortable or skilled in negotiating for salary. Steve makes the point that even female movie stars can’t pull the salaries of their male counterparts.

So how can we change the climate?  Sharon has several well-researched and common-sense suggestions:

  1. Understand our healthcare system and factor in potential costs needed to maintain a healthy quality of life in retirement.
  2. Since many women are caring for children and want to supply them with academic and other advantages, Sharon counsels those women to focus on taking care of their own financial needs first, thereby ultimately being better able to provide for others.
  3. Pay yourself first. Work with a qualified financial advisor, which can even be a nonprofit counselor, to establish a habit of saving part of every paycheck, no matter how small the amount.
  4. Cut costs where you can—on your cable bill, going out to dinner, any non-essential activity in your life.

Steve and Sharon agree on the importance of escaping the vicious cycle of living paycheck to paycheck by creating a virtuous cycle of saving for your financial future. It takes courage and it takes discipline, but the rewards down the road are great.

Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital.  Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions.  Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances.  The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.

Read The Entire Transcript Here

Steve Pomeranz: I want to welcome back one of my favorite guests.  Her name is Sharon Epperson, and she is a correspondent for CNBC covering the commodity markets and personal finance.  She also appears on NBC news shows Today and the NBC Nightly News.  Welcome back to the show, Sharon.

Sharon Epperson: Thank you for having me, Steve.

Steve Pomeranz: You recently co-authored an article entitled “All the Single Ladies, All The Single Ladies, Start Planning for Your Financial Future.” There’s some serious stuff going on here with the ability of single women to save properly for retirement.  Tell us about it.

Sharon Epperson: It’s really startling the statistics that have come from the recent survey done by the Employee Benefits Research Institute about how women, single women, in particular, how little they have saved.  About 40% of women who are not married have saved less than $1000.  That is much more than the number of single men, much more than the number of married women or married men.  Basically, the people who are saving the least amount in this world are unmarried women.  The issue becomes when you’re in retirement and have to fund your entire retirement without an inheritance, without help from a spouse, without all of that.  You really, really are going to be relying on yourself, and this is really setting a lot of women back.  I don’t think they’re thinking about what this means for their future.

Steve Pomeranz: First of all, they had the lack of financial security of a dual-earner household.  That’s number one.  We can talk a little bit about that, but, in addition, in general, I think women make less than men.

Sharon Epperson:     Right, right.  Of course, we’ve just had Equal Pay Day, really bringing to the attention for those who are not aware of how little women make compared to men in almost every single industry, every single profession.  That is a huge huge issue, not just because we’re being paid less at the moment, but because when you look at what your social security, if you do believe it will be there for you, which is the only guaranteed stream of income many people will ever have, if they haven’t planned appropriately, in particular, that is going to be less, too, because it’s based on your earnings over your career.

Steve Pomeranz: Does anybody have any idea why the system still persists that women make less than men?  I could see years ago.

Sharon Epperson: I think that there’s several factors, I think.  I think you could say that there are some employers who are not enlightened, but I think it’s also that many women may not be enlightened in terms of what their colleagues are being paid.  The transparency in terms of pay is really nonexistent in many places, in many companies, and in many industries.  That’s a big problem.  If you have an idea of what your colleague is being paid, you have a better idea of what you should be asking for and negotiating for.  The other big issue is negotiation.  Women just, survey after survey shows, really do not advocate for themselves or negotiate in the same way as men.  That is another big issue that prevents women from necessarily getting the salary or the pay that they should be getting.  You just have to figure out how to ask for it and ask.

Steve Pomeranz: It’s amazing, the news about the movie star women who aren’t making as much as their male counterparts, and it seems so blatant from someone sitting as far away from that picture as I am.  There must be some other things going on other than they didn’t know and they didn’t ask.  These people have agents and so on.  I don’t really understand it.  It’s really, this is not the forum for that, but I do question it from time to time.  You know, also quoting your article, you write that studies have shown that women generally don’t think they will need as much money as men, despite the obvious fact that we all know that generally speaking, women live longer.

Sharon Epperson: Yes, I think that it’s just the lack of financial knowledge, in general, of knowing what factors to consider when you’re planning how much money you’re going to need for retirement.  I think women and men do a poor job in factoring in how much health care is going to mean for the amount of money they’re going to have to have for retirement.  Also, assuming that you’re going to be as healthy as you are today, decades from now.  You’re hoping that that will happen.
If you have a healthy diet and you’re exercising and your family history is such that you intend to live a long life, then you should understand that with that will come, not necessarily chronic issues that are costly for health care, but just a long life expectancy, and you’re going to have to pay for that.  I think people are also, men and women, are unclear about what the government will pay for when you’re retired in terms of health care and assume that Medicare is going to pay for everything.  That, of course, is not the case.  I think the health care piece is a really really big piece in terms of women and men, as well, not really understanding how much money they’re going to need in retirement.

Steve Pomeranz: Yeah.  I can also see how a negative cycle has started here.  Women are making less, but they have the same expenses of carrying the housing costs or rental and other costs to live, and so they’re saving less, and it creates this vicious cycle where they just can’t seem to get ahead with regards to their savings.  You gave a startling figure that 40% of single women only have $1000 saved.  That’s just really incredibly disheartening.

Sharon Epperson:     Here’s another factor.  In that number of single women, I didn’t really break it down in terms of how many are mothers, but whether you are married or not married, mothers also often put their children first in terms of everything, including financial issues.  Whether or not the mother has left the workforce to care for the child or take in a lower-paying, more flexible position to care for the child or for an aging parent, that’s another issue that is a significant one that affects women much more so than men and prevents women from necessarily rising up the ranks in a profession and getting the top salary.

Steve Pomeranz: I think that’s got to account for really most of the disparity I would think.

Sharon Epperson: Mm-hmm (affirmative).

Steve Pomeranz: What can a person do now, knowing and armed with this information and looking ahead at the future, knowing that people are living longer and longer, and especially women live longer, but you’re making less.  What can a woman do who is in this situation to help herself?

Sharon Epperson:     I think the first thing, let’s start with the women who are moms or plan to be moms one day.  Please understand that there is, and you’ve said this many times as well, no financial aid for you in retirement.  There is no scholarship.  There is no grant.  There may be no trust fund or no special godmother’s gift for you when you’re in retirement, but your child may be able to have these things, so put yourself first.  It sounds selfish to some, but the reality is that we, and I’m a mother of two, that we need to take care of ourselves first financially and in every other way, so that we can be there for our children when they need us to offer financial advice perhaps more than the actual funding of what they need to do.
The other thing that I think is simply planning for the future and working with someone to help you do that, whether you’re in a situation where you need to get your debt and credit situation together, so you go to a nonprofit counselor, credit counselor, or whether you are in a situation where you need a financial advisor, which I think almost everyone does.  There’s a price point for everyone if you really look out there to find some type of financial help.  I think that that’s a really good thing to do to help you get on the right page.  The simplest thing to do and the hardest thing to do when you are literally paycheck to paycheck is to save is to actually put money away.  From the time you get that paycheck, and, actually, before you even get it because you’re setting it up with your payroll department, have money already direct deposited automatically into a savings.

Steve Pomeranz: You don’t see it.

Sharon Epperson: So it never hits your checking account, and you never see it.

Steve Pomeranz: There’s the old adage that you pay yourself first.  You treat yourself as your first bill, whether it’s $25 that are coming out per paycheck of $100, whatever it is that you can afford, that money comes out first, and everything else becomes secondary.  That money…

Sharon Epperson: I firmly believe that.

Steve Pomeranz: It snowballs.  Really, literally, you’d be surprised how fast that money will accumulate, and you’ll start to have $2500 and $5000 and then it just builds upon itself eventually.  You can get it invested and maybe earn a decent rate of return over a long period of time on it.  Again, it’s virtuous.  It’s creating the virtuous cycle and escaping from that vicious cycle.

Sharon Epperson: You know, Steve, one thing I found out when I was starting out in my career is that when you start that discipline of putting the money away, when other things crop up that encroach on your discipline, such as home, children, car payments, you’ve already established a discipline, that a portion of your paycheck, you never see it, and it’s going to savings.  It’s so important to do that.  For the young women and men who are listening, I think start as soon as you get that first job, and I mean, your high school job.  I mean as early as you can possibly start putting that money away.
For those who are, and I do talk to a lot of folks who are like, “Look, there’s just nothing left.” There’s got to be.  You’ve got to figure out some way to go to a third-party utility provider, maybe cut your utility bill a little bit and use the money that you’re saving there to put to savings.  Most people now watch whatever they watch, and, hopefully, they’re watching CNBC, but they’re watching it on a device.  They may not be watching it on a television.  Maybe you’re cutting your costs that way.  Anything that you can figure out and put that money towards savings, it’s really really important.  This is one story that always comes to mind, Steve, is I remember talking to a young woman who was working at a television network and, she knew that the show that she was working on was going to end, and she was going to lose her job.
I was visiting the city where she was working.  She said, “So where are we going to go out to dinner tonight?” I said, “Well, we’re not going to go out to dinner, right?  We’re going to cook at your apartment because why would we go out to dinner if you now in six weeks, you are not going to have a job?” I think people often just don’t think.  They don’t want to think about the worst case scenarios.  As a journalist and as someone who is always looking at risk out there just from my personal financial situation, too, I’m always wary about what the risks could be and wanting to make sure that I’m financially secure and wanting to make sure that I come up with things for my readers and follow my viewers to help them become financially secure.
Thinking about what might happen and what is really important as you’re planning for the future.  Even if you’re in your 20s and 30s, and you’re thinking this is so far down the road, and I love what I do, and I’m going to do what I want to do because this is the path that I’ve chosen, you never know what’s going to come up and what you may need in terms of your finances as you grow older.  You want to make sure that you’re secure.

Steve Pomeranz: Beautiful advice.

Sharon Epperson: And free to do what you want to do.

Steve Pomeranz: Beautiful advice from Sharon Epperson, correspondent for CNBC.

Sharon, that’s why I love having you on.  Thank you so much for joining me.

Sharon Epperson:     Thank you.  It’s always a pleasure.  I look forward to speaking to you again soon.