Tuesday, December 13, 2011

#pfbookclub post!

Life got in the way of....well, everyone for #pfbookclub, but I wanted to get my thoughts down anyway.

Shortchanged was heavy on statistics, light on prescription. The author is clear from the beginning that this is not a financial how-to book or a guide to changing the status quo - I guess she thinks that shedding light on the situation will be enough to start making some changes. I can't say whether that's right, but here are my impressions:

From the first chapter, I was shocked at how widows are affected financially by the death of their husbands. I had no idea, and it's particularly scary because even when you do everything right by saving for retirement or paying your mortgage off, medical expenses can wipe out any advantages and leave you, as an elderly woman, floundering. A terrifying thought. The only way I can think of to combat this is to pay particularly close attention to life insurance and maintain health insurance whenever possible.

The second chapter really struck home for me in terms of the general population of women, even if it isn't true to my particular situation or the situation of most of the women I know. Women suffer from financial disparity with men in two ways: lower income and lower wealth. Women earn $.78 for every dollar men earn, with the youngest members of the workforce earning $.95 to every dollar their male counterparts earn. So we're making SOME headway in terms of the income gap. But the bigger problem is the difference in wealth (a combination of income potential, expenses and savings). Women are nowhere near men in wealth, and there are a host of reasons:
  • More women than men work in part-time positions, which not only pay less, but offer less benefits, including health insurance (leaving women to pay out of pocket or buy private health insurance), retirement funds with or without employer matching, paid sick leave, access to flexible spending accounts or other ways to reduce their tax liability.
  • Women change jobs more frequently, losing out on vesting opportunities. What's more, they are also less likely to roll their retirement savings into another vehicle, opting instead to cash out to pay down debt (this is about the only example from this list that is a bad choice - everything else is out of most women's control).
  • Women are more likely to leave the workforce in full or to drop to part-time work due to children.
  • Women tend to choose lower paying jobs in service industries.
  • Women are less likely to have union jobs with unionized wages and pensions.
  • The IRA limits for non-working spouses affect more women than men, since women are more likely to stay home - this reduces a woman's overall retirement savings ability.
  • Men own more homes and can deduct mortgage interest, while women are more likely to rent.
  • Women are more likely to receive welfare and food stamps, and are more likely to resort to bad debt like car loans and credit cards to make up the shortfall in their monthly expenses.
  • Women are less likely to invest in the stock market (although when they do, they tend to get better returns than men).
  • 84% of custodial single parents are women.
Um. Ouch.

Peanut pointed out that along with the way women are catching up to men in pay and the way men are becoming parodies in popular culture ("the eternal adolescent"), it's possible that at some point in the future, the perceived helplessness of women in regards to finances may reverse. It's possible, and I'd say overdue, but I think it'll take a long time for that to happen.

My favorite chapter was about marriage and how men and women choose to divide up financial responsibilities. Peanut and I fall into the category of sharing everything together - we share all accounts and even all passwords - if one of us were to be incapacitated for any reason, the other is fully capable of taking charge of our finances. I tend to pay the bills and update the spreadsheet a little more than him, because I have this blog to update :), but the spreadsheet lives on Peanut's computer and he writes the rent check, so we're both involved at all times. I realize this is unusual, but I can't imagine it working any other way for us.

The last chapter really drove home some of the things that I didn't realize were true for American women. I knew that my job requires me to be here for one year before I'm eligible for maternity leave; I didn't realize that's the bare minimum of what the law requires - and that the law allows for that leave but it only protects your job and isn't paid leave. I thought we were way more enlightened that that!

In terms of the proposed policy changes, my only question is "Where does the money come from?" Our government's budget is already dangerously overdrawn, and I don't believe it's the government's responsibility to help us financially support our families. Instead, I think it's the government's responsibility to help create an environment where we are able to support our families independently. Mandating paid leave time instead of just protecting parents' jobs would be a great step in the right direction, and could be handled the same way unemployment benefits are currently handled, as an expense to the company. In addition, requiring benefits to be offered to employees working twenty hours per week or more, instead of full time, would enable many people to create flexible work arrangements that would benefit both corporations and families.

As a side note, it occurred to me this week while listening to NPR that we are headed right down the road for socialized medicine, and it is entirely likely that my kids will have an entirely different medical treatment experience than I have had. I hope it's better, but with medical costs skyrocketing, I fear that will not be the case.

Overall, the book leaves me with a grim understanding of the future of my family. First, while this information may not be enough to change my mind on positions like staying home with a baby*, it has armed me with the ammunition to try to deflect some of the dangers that face many women. For example, maintaining a retirement account for a non-working parent,

Second, I am just so, so thankful for Peanut, whose attitudes on money are so similar to mine we might as well be the same person. Because of our joint involvement with our finances and our shared goals for life, parenting, and retirement, I am not as afraid of the future as I would be were I single or, worse, still with any of my exes.

* Right now, our plan is for me to continue working after having children, up until the point where daycare costs exceed the lowest salary in our household, which will probably be mine. At that time, one of us (probably me) would stay home for a few years. We'll see how close we stick to that when a baby is an actual, rather than theoretical, reality.

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