Millennial women, take better control of your financial futures

Millennial women are not grabbing the financial bull by the horns, a study by UBS reveals. 

UBS measured what it calls deferment of financial decisions. The shocking statistic is not that 54% of baby boomer women defer financial decisions to their husbands but that 56% of millennial women defer.

The trend is moving in the wrong direction. 

In my very first column, we discussed that the average age of a widow in the USA is 59, and 30 is the average age of women when they divorce. Consistently, we see in study after study that women either defer or lack confidence in their judgment when it comes to financial matters and investing in particular.

Women young and old should inform themselves, and the men who love them should insist they do so. There are financial realities few of us are prepared for when we experience life-changing events. When I became widowed in 2017, I discovered three harsh realities I want to share with married women who may become single whether they want to or not. 

Women young and old should inform themselves financially; you never know when a life-changing event will happen. (Photo: Getty Images)

Your income tax rate will rise. Mine did. I went from filing married jointly to filing single.  As a single filer, your deductions are much lower than those for married couples. In 2019, single filers can claim a standard deduction of $12,200, and married couples filing jointly can claim a standard deduction of $24,400. The discrepancy between single and married filers tax rates is also noteworthy. If you are in, say, the 22% tax bracket, you get there much quicker as a single filer with $39,476 in annual taxable income versus $78,951 for your married neighbors.

You will lose half the profit exemption in your home. The tax code provides for a $250,000 capital gains exemption for individuals who sell a home. For a married couple, the capital gains exemption doubles to $500,000. The difference in the proceeds from selling a home for a single woman can be significant. Plan for it, if possible.

Don’t wait: You just got married. It’s time to prepare for divorce and death (sorry)

Never too late: You don’t have to be a pro to make millions through investing

Don’t count on Social Security. I am not an expert on Social Security. I learned that neither are most people who work for the agency. I spoke to various agency representatives and combed the website with conflicting results. It feels like a lose-lose parlor game to me. The best advice I can give you is to meet with a representative before you need to. There are nuances to the survivor’s benefit. There are income limitations before turning 66 years old that women need to understand. And don’t forget, Social Security payments are subject to tax.

The final gut punch for me? I learned the extremely high cost of filing an estate tax return was no longer deductible in 2018. Deductibility was one of the casualties of the Tax Cut Jobs Act of 2017. The IRS sent a survey asking for my input on the cost of filing an estate tax return. Call me cynical: I tossed each questionnaire in the garbage. When I became single, it didn’t seem to me Uncle Sam cared one whit.

Develop a plan before you are forced to. Inform yourself. And whatever you do, no matter your age, don’t defer – engage in the financial discussion.

Nancy Tengler is chief investment strategist at Tengler Wealth Management, ButcherJoseph Asset Management. She is the author of “The Women’s Guide to Successful Investing.”

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