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By Adam Zoll | 10-25-2013 11:00 AM

Financial Education a Must for Women

Women typically have fewer years in the workforce and live longer than men, so it's critical for them to be educated about saving for retirement as well as family finances, says TIAA-CREF's Sheila Gugliuzza.

Adam Zoll: For Morningstar, I'm Adam Zoll. Women have made tremendous strides in the workplace in recent decades, but when it comes to their personal finances, many still have questions. Here to talk about some of these questions and ways to address them is Sheila Gugliuzza. Sheila is a wealth manager for TIAA-CREF based here in Chicago.

Sheila, thanks for being with us.

Sheila Gugliuzza: Thanks for having me.

Zoll: Let’s first talk about why there is a need for financial-literacy education, specifically for women. What are some of the financial challenges they face that maybe unique to women?

Gugliuzza: One of the interesting elements for women is often they spend 10 years out of the workforce. A large percentage are taking care of kids or taking care of parents, and if you're out of workforce, you're not earning money. So, you're not saving for retirement.

Another element that's critical for women is we tend to live longer, which can be great, except if you're not saving for retirement, it can put more stress on your savings to provide for you throughout your retirement years.

Zoll: Is the issue not saving, or is it not being informed about saving and actually being educated in terms of why it's important to save earlier?

Gugliuzza: Well, they complement one another. The more you now and are comfortable with why you should be saving, and how you should be utilizing the money, it encourages you to do so. In addition, if you are not spending the time in the workforce, you're not participating in your 401(k) or 403(b) or whatever employer retirement plan may be available to you.

Zoll: You mentioned, for example, longevity. For many women, I would imagine a divorce or being widowed, in many cases an unanticipated event probably throws them into the situation where they suddenly need to get educated, but by then they need to take a crash course. So, I would assume that that getting educated before something drastic happens, a life-changing event happens, is probably pretty key.

Gugliuzza: It is. One of the things that I've learned particularly as I've gotten more gray hair over the years is unexpected things happen in life. That is just the way it is. It can be something big like a divorce or a loved one dying. It can be something smaller like a basement getting flooded, but there is stress that happens to our finances. And the more prepared we are for them, the better able we are to deal with them.

A critical element for women, particularly women that tend to have their husbands do the finances at home, is if you're not thinking that your financial situation and then you're thrown into owning that when your husband dies or a divorce happens, it adds to the stress that you're already feeling.

So, when you want to be mourning your husband, or figuring out your life without this partner, you are also taking on this burden of learning about finances, which can make the situation so much more overwhelming. And that's why we think it's so critical to learn about finances earlier. If you can make it part of your life and learn a little bit year after year, then you become comfortable with it, and it doesn't feel like all of a sudden you need a Ph.D. in something you never cared about before.

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