How Women Are Different from Men, Financially Speaking

We all know men and women are different in some fundamental ways. But is this true when it comes to financial planning? In a word, yes. In the financial world, women often find themselves in very different circumstances than their male counterparts.

Everyone wants financial security. Yet women often face financial headwinds that can affect their ability to achieve it. The good news is that women today have never been in a better position to achieve financial security for themselves and their families.

More women than ever are successful professionals, business owners, entrepreneurs, and knowledgeable investors. Their economic clout is growing, and women's impact on the traditional workplace is still unfolding positively as women earn college and graduate degrees in record numbers and seek to successfully integrate their work and home lives to provide for their families. So what financial course will you chart?

Some key differences

On the path to financial security, it's important for women to understand what they might be up against, financially speaking:

Women have longer life expectancies. Women live an average of 4.9 years longer than men.¹ A longer life expectancy presents several financial challenges for women:

• Women will need to stretch their retirement dollars further
• Women are more likely to need some type of long-term care, and may have to face some of their health-care needs alone
• Married women are likely to outlive their husbands, which means they could have ultimate responsibility for disposition of the marital estate

Women generally earn less and have fewer savings. According to the Bureau of Labor Statistics, within most occupational categories, women who work full-time, year-round, earn only 81% (on average) of what men earn.² This wage gap can significantly impact women's overall savings, Social Security retirement benefits, and pensions.

The dilemma is that while women generally earn less than men, they need those dollars to last longer due to a longer life expectancy. With smaller financial cushions, women are more vulnerable to unexpected economic obstacles, such as a job loss, divorce, or single parenthood. And according to U.S. Census Bureau statistics, women are more likely than men to be living in poverty throughout their lives.³

Women are more likely to take career breaks for caregiving. Women are much more likely than men to take time out of their careers to raise children and/or care for aging parents.⁴ Sometimes this is by choice. But by moving in and out of the workforce, women face several significant financial implications:

• Lost income, employer-provided health insurance, retirement benefits, and other employee benefits
• Less savings
• A potentially lower Social Security retirement benefit
• Possibly a tougher time finding a job, or a comparable job (in terms of pay and benefits), when reentering the workforce
• Increased vulnerability in the event of divorce or death of a spouse

In addition to stepping out of the workforce more frequently to care for others, women are more likely to try to balance work and family by working part-time, which results in less income, and by requesting flexible work schedules, which can impact their career advancement (and thus the bottom line) if an employer unfairly assumes that women's caregiving responsibilities will come at the expense of dedication to their jobs.

Women are more likely to be living on their own. Whether through choice, divorce, or death of a spouse, more women are living on their own. This means they'll need to take sole responsibility for protecting their income and making financial decisions.

Women sometimes are more conservative investors. Whether they're saving for a home, college, retirement, or a trip around the world, women need their money to work hard for them. Sometimes, though, women tend to be more conservative investors than men,⁵ which means their savings might not be on track to meet their financial goals.

Women need to protect their assets. As women continue to earn money, become the main breadwinners for their families, and run their own businesses, it's vital that they take steps to protect their assets, both personal and business. Without an asset protection plan, a woman's wealth is vulnerable to taxes, lawsuits, accidents, and other financial risks that are part of everyday life. But women may be too busy handling their day-to-day responsibilities to take the time to implement an appropriate plan.

Steps women can take

In the past, women may have taken a less active role in household financial decision making. But, for many, those days are over. Today, women have more financial responsibility for themselves and their families. So it's critical that women know how to save, invest, and plan for the future. Here are some things women can do:

Take control of your money. Create a budget, manage debt and credit wisely, set and prioritize financial goals, and implement a savings and investment strategy to meet those goals.

Become a knowledgeable investor. Learn basic investing concepts, such as asset classes, risk tolerance, time horizon, diversification, inflation, the role of various financial vehicles like 401(k)s and IRAs, and the role of income, growth, and safety investments in a portfolio. Look for investing opportunities in the purchasing decisions you make every day. Have patience, be willing to ask questions, admit mistakes, and seek help when necessary.

Plan for retirement. Save as much as you can for retirement. Estimate how much money you'll need in retirement, and how much you can expect from your savings, Social Security, and/or an employer pension. Understand how your Social Security benefit amount will change depending on the age you retire, and also how years spent out of the workforce might affect the amount you receive. At retirement, make sure you understand your retirement plan distribution options, and review your portfolio regularly. Also, factor the cost of health care (including long-term care) into your retirement planning, and understand the basic rules of Medicare.

Advocate for yourself in the workplace. Have confidence in your work ability and advocate for your worth in the workplace by researching salary ranges, negotiating your starting salary, seeking highly visible job assignments, networking, and asking for raises and promotions. In addition, keep an eye out for new career opportunities, entrepreneurial ventures, and/or ways to grow your business.

Seek help to balance work and family. If you have children and work outside the home, investigate and negotiate flexible work arrangements that may allow you to keep working, and make sure your spouse is equally invested in household and child-related responsibilities. If you stay at home to care for children, keep your skills up-to-date to the extent possible in case you return to the workforce, and stay involved in household financial decision making. If you're caring for aging parents, ask adult siblings or family members for help, and seek outside services and support groups that can offer you a respite and help you cope with stress.

Protect your assets. Identify potential risk exposure and implement strategies to reduce that exposure. For example, life and disability insurance is vital to protect your ability to earn an income and/or care for your family in the event of disability or death. In some cases, more sophisticated strategies, such as other legal entities or trusts, may be needed.

Create an estate plan. To ensure that your personal and financial wishes will be carried out in the event of your incapacity or death, consider executing basic estate planning documents, such as a will, trust, durable power of attorney, and health-care proxy.

A financial professional can help

Women are the key to their own financial futures--it's critical that women educate themselves about finances and be able to make financial decisions. Yet the world of financial planning isn't always easy or convenient. In many cases, women can benefit greatly from working with a financial professional who can help them understand their options and implement plans designed to provide women and their families with financially secure lives.

IMPORTANT DISCLOSURES The information presented here is not specific to any individual's personal circumstances. To the extent that this material and/or website concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials and/or website are provided for general information and educational purposes only based upon publicly available information. Information throughout these materials and/or website, whether stock quotes, charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe to be reliable - we cannot assure the accuracy or completeness of these materials and/or website. These materials and/or website do not constitute a complete description of our investment services or performance, and nothing in this information should be interpreted to state or imply that past results are an indication of future performance. There are not warranties, expressed or implied, as to the accuracy, completeness, or results obtained from information contained within these materials and/or posted on this website or any "linked" website.   The information in these materials and/or website may change at any time and without notice. This communication is strictly intended for individuals residing in the state(s) of CA. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2012.

Mid-Year Reality Check: Covering Your Bases in Uncertain Times

Imagine playing a complicated game, but the rules of the game are changing, and the new rules have yet to be announced. That's what income tax planning is like this year. In fact, if there was ever a year to spend some quality time with your financial professional, this is it. Here are a few items to discuss.

How will higher rates next year affect you?

Federal income tax rates are scheduled to jump in 2013, with the bottom (10%) rate disappearing, and the top rate increasing from 35% to 39.6%. Starting in 2013, high wage earners--those with wages exceeding $200,000 ($250,000 for married couples filing jointly and $125,000 for married individuals filing separately)--will also have to pay an additional 0.9% in the hospital insurance (HI) portion of their payroll tax, commonly referred to as the Medicare portion.

Could the current federal income tax rates be extended again? Of course, but it's far from a certain bet, and the odds are that any action would not take place until after the presidential election. That means any financial plan you put in place has to account for this uncertainty. And the uncertainty extends beyond just tax rates, because a number of popular tax breaks are also scheduled to expire at the end of the year, while others have already expired. So, any potential moves have to be considered in the context of several "what if" scenarios. For example, if you have the opportunity to defer compensation to next year, you have to really think about whether that makes sense, or if you would be better off paying tax on the income at this year's rates.

Potential investment moves

In addition to increased tax rates on earnings, the rates that apply to long-term capital gain and qualifying dividends are scheduled to increase in 2013. The maximum rate on long-term capital gain will jump from 15% to 20%. And while qualifying dividends currently benefit from being taxed at the rates that apply to long-term capital gain, in 2013 they'll be taxed at ordinary income tax rates. Also beginning in 2013, a new 3.8% Medicare contribution tax will be imposed on the net investment income of individuals with modified adjusted gross income that exceeds $200,000 ($250,000 for married couples filing jointly and $125,000 for married individuals filing separately). That means someone in the top tax bracket could potentially end up paying tax on some investment income at a total rate of 43.4%.

Potentially higher rates in 2013 could be a motivating factor in your investment strategy. For example, you might want to consider selling investments that have appreciated in value to recognize long-term capital gain in 2012, before the maximum rate is scheduled to increase. Alternatively, you might consider timing the sale of an investment to postpone the recognition of a capital loss until 2013, when it could be more valuable.

Roth conversions--is this the year?

If you've been on the fence about converting traditional IRA funds or pretax 401(k) contributions to a Roth account, you ought to give the matter one last hard look before the year ends. That's because when you convert a traditional IRA to a Roth IRA, or pretax dollars in a 401(k) plan to a Roth account, the converted funds are subject to federal income tax (to the extent the funds represent investment earnings, tax-deductible IRA contributions, or pretax 401(k) contributions) in the year that you make the conversion.

If tax rates go up next year, so will the effective cost of doing a Roth conversion. Additionally, qualified distributions from Roth IRAs and Roth 401(k)s are free from federal income tax. That could make a big difference in retirement if you're paying tax at a higher rate at the time. Whether a Roth conversion is right for you depends on a number of factors. If it makes sense for you, though, it might pay to think about acting now, rather than later.

IMPORTANT DISCLOSURES The information presented here is not specific to any individual's personal circumstances. To the extent that this material and/or website concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials and/or website are provided for general information and educational purposes only based upon publicly available information. Information throughout these materials and/or website, whether stock quotes, charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe to be reliable - we cannot assure the accuracy or completeness of these materials and/or website. These materials and/or website do not constitute a complete description of our investment services or performance, and nothing in this information should be interpreted to state or imply that past results are an indication of future performance. There are not warranties, expressed or implied, as to the accuracy, completeness, or results obtained from information contained within these materials and/or posted on this website or any "linked" website.   The information in these materials and/or website may change at any time and without notice. This communication is strictly intended for individuals residing in the state(s) of CA. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2012.

Ways Parents Can Help Their Boomerang Kids

It's been called the new retirement wild card. But it's not inflation, health-care costs, or taxes, though those things certainly matter. What is it that's causing so much uncertainty? It's boomerang kids, and the money their parents spend on them. The trend According to the U.S. Census Bureau, there were 6 million young adults ages 25 to 34 living at home in 2011--19% of all men (up from 14% in 2005) and 10% of all women (up from 8% in 2005). Not surprisingly, the percentages are higher for young adults in the 18 to 24 age bracket, with 59% of young men and 50% of young women living with their parents in 2011. Sociologists have cited a number of reasons for this trend--the recession, college debt, the high cost of housing, delayed marriage, and a tendency toward prolonged adolescence. But whatever the reason, there's no doubt that boomerang children can be a mixed blessing for their parents, both emotionally and financially. Just when parents may be looking forward to being on their own and preparing for their retirement, their children are back in the nest and relying on their income. While the extra company might be welcome, you don't want to sacrifice your emotional and financial health to help your kids. Set ground rules If your adult children can't afford to live on their own, establish ground rules for moving back home, including general house rules, how long they plan to (or can) stay, and how they can contribute to the household in terms of rent and chores. As an adult, your child should be expected to contribute financially to the household overhead if he or she is working. Determine a reasonable amount your child can contribute toward rent, food, utilities, and car expenses. You can then choose to apply this money directly to household expenses or set it aside and give it to your child when he or she moves out, when it can be used for a security deposit on an apartment, a down payment on a car, or some other necessary expense. You should also discuss your child's long-term plan for independence. Does your child have a job or is he or she making sincere efforts to look for work? Does your child need or want to go back to school? Is your child working and saving money for rent, a down payment on a home, or graduate school? Make sure your child's plans are realistic and that he or she is taking steps to meet those goals. It's a balancing act, and there isn't a road map or any right answers. It's common for parents to wonder if they're making a mistake by cushioning their child's transition to adulthood too long or feel anxious if their child isn't making sufficient progress toward independence. Turn off the free-flowing money spigot It can be tempting for parents to pay all of their adult children's expenses--big and small--in an effort to help them get on their feet, but doing so is unlikely to teach them self-sufficiency. Instead, it will probably make them further dependent on you. If you can afford it, consider giving your child a lump sum for him or her to budget rather than just paying your child's ongoing expenses or paying off his or her debt, and make it clear that is all the financial assistance you plan to provide. Or, instead of giving your child money outright, consider loaning your child money at a low interest rate. If you can't afford to hand over a sum of cash or prefer not to, consider helping with a few critical expenses. Evaluate what your money is being spent on. A car payment? Credit card debt? Health insurance? A fancy cell phone? Student loans? General spending money? Your child is going to have to cut the frills and live with the basics. If your child is under age 26, consider adding him or her to your family health plan; otherwise, consider helping him or her pay for health insurance. Think twice about co-signing a new car loan or agreeing to expensive lease payments. Have your child buy a cheaper used car and raise the deductible on his or her car insurance policy to lower premiums. Help your child research the best repayment plan for student loans, but don't pay the bills unless absolutely necessary. Same goes for credit card balances. Have your child choose a less expensive cell phone plan, or consolidate phones under a family plan and have your child pay his or her share. Bottom line--it's important for your child to live within his or her financial means, not yours. Solidify your own retirement plan Even if your child contributes financially to the household, you may still find yourself paying for items he or she can't afford, like student loans or medical bills, or agreeing to pay for bigger ticket items like graduate school or a house down payment. But beware of jeopardizing your retirement to do this--make sure your retirement savings are on track. A financial professional can help you see whether your current rate of savings will provide you with enough income during retirement, and can also help you determine how much you can afford to spend on your adult child now.
	A financial strain Parents naturally want to help their children during hard times, but in some cases, the financial strain of another adult (or two or three) in the house can be too much of a financial shock. If your adult child needs to move back home, discuss how long your child plans to stay and how he or she can contribute financially to the household.

IMPORTANT DISCLOSURES The information presented here is not specific to any individual's personal circumstances. To the extent that this material and/or website concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials and/or website are provided for general information and educational purposes only based upon publicly available information. Information throughout these materials and/or website, whether stock quotes, charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe to be reliable - we cannot assure the accuracy or completeness of these materials and/or website. These materials and/or website do not constitute a complete description of our investment services or performance, and nothing in this information should be interpreted to state or imply that past results are an indication of future performance. There are not warranties, expressed or implied, as to the accuracy, completeness, or results obtained from information contained within these materials and/or posted on this website or any "linked" website.   The information in these materials and/or website may change at any time and without notice. This communication is strictly intended for individuals residing in the state(s) of CA. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2012.

Natural Disaster Planning for Small Businesses

Whether your small business survives a natural disaster may depend as much (if not more) on the plans you put in place now, before a disaster occurs, as on what you do after a disaster strikes. Here are some disaster preparedness ideas for you to consider for your small business. Before the disaster Evaluate possible natural disasters that may affect your small business. Determine the probability of a disaster occurring and its likely impact. Some natural disaster risks to consider might include hurricanes, tornadoes, straight-line winds, thunderstorms, lightning, snow and ice storms, avalanches, extreme temperatures, flooding, drought, volcanoes, earthquakes, tsunamis, mudslides, sinkholes, and wildfires. Identify the critical functions of your business that must be maintained or restored as soon as possible. Be sure to consider the means of communication for your business, whether through phones, Internet access, or direct contact at a physical location. Also, consider possible disruptions to your supply lines. Identify critical functions of your business that require power. Consider a power backup solution in case of a power outage. Estimate the revenue that may be lost if disaster strikes. For both the short term and longer, will you still have goods or services to provide, and customers to purchase them? Identify expenses that must be paid even if a natural disaster strikes. For example, mortgage, lease, or rental payments may still need to be made even after a disaster strikes your business. Keep emergency contact information handy and in a safe place. Also, back up all of your critical data and keep a copy at one or more other safe locations. If your small business has more than one location, consider whether operations could be redirected to other locations if a natural disaster strikes at one location. Maintain one or more disaster kits. Consider stocking the kits with water, nonperishable food, a flashlight, a portable radio, batteries, a first aid kit, and a cell phone. Consider any steps that could mitigate the risks of a natural disaster. For example, rent or build facilities that may withstand the forces of a hurricane or an earthquake, or locate on sites less prone to flooding. Insure against losses to your small business resulting from natural disasters. Property insurance may insure against some damage to property. Key person life insurance may protect against the loss of a key employee. Business interruption insurance may cover certain expenses if you are unable to operate your small business due to a natural disaster. Special insurance may be required if you wish to insure your small business against certain natural disasters such as flooding or earthquakes. Communicate your business plans for a natural disaster with your employees. Consider running a disaster drill to put your plan to the test. Monitor impending or approaching potential natural disasters, where possible. Take appropriate steps to keep your employees and yourself safe. After the disaster Communicate with your employees. They may have to deal with personal disaster-related issues of their own. Focus initially on restoring critical functions as quickly as possible. Hopefully, any planning you did prior to the disaster will serve you well. Document any damage or losses and contact your insurance company or agent. You may need to mitigate damages (for example, having a roof that is damaged tarped so that further damage does not occur). The Federal Emergency Management Agency (FEMA), along with state and local governments, may provide some assistance. However, most assistance provided by FEMA is to individuals, rather than to businesses, and is intended to provide only for essential needs. The assistance cannot duplicate any benefit you receive from insurance. The Small Business Administration (SBA) can provide a disaster loan for up to $2 million (generally, at favorable terms). The loans cannot duplicate any benefit you receive from your insurance or FEMA. The loans can be for losses that are not covered by or compensated for by your insurance (including deductibles). The loans can be used for the repair or replacement of certain physical property used in your small business, or for normal financial obligations of your business that you could have met if the disaster had not occurred. If your business is in a federally declared disaster area, you may be entitled to special tax treatment. This may include an extended time for filing tax returns and paying tax, or certain other favorable tax provisions occasionally granted to individuals who work or live in a federal disaster area.

The survival of your small business after a natural disaster may very well depend on the disaster preparedness plan you create now.

IMPORTANT DISCLOSURES The information presented here is not specific to any individual's personal circumstances. To the extent that this material and/or website concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials and/or website are provided for general information and educational purposes only based upon publicly available information. Information throughout these materials and/or website, whether stock quotes, charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe to be reliable - we cannot assure the accuracy or completeness of these materials and/or website. These materials and/or website do not constitute a complete description of our investment services or performance, and nothing in this information should be interpreted to state or imply that past results are an indication of future performance. There are not warranties, expressed or implied, as to the accuracy, completeness, or results obtained from information contained within these materials and/or posted on this website or any "linked" website.   The information in these materials and/or website may change at any time and without notice. This communication is strictly intended for individuals residing in the state(s) of CA. No offers may be made or accepted from any resident outside the specific states referenced.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2012.