If you’re a woman who is about to take a career break to have children, Kimberlee Davis has a message for you.
“Don’t let your partner become your plan,” she says. “You have to be the CEO of your own life.”
She is talking about financial plans, including retirement plans, and all things money. Davis, a financial advisor in Newport Beach, California, and podcaster has just published a new book on the subject, “Fiscal Feminist: A Financial Wake-Up Call For Women.”
It was, she tells me, partly inspired by her own story. “Learn from my mistakes,” she told me via Zoom.
She put her highly successful career on hold to raise three children, and followed her husband to a foreign country for his career. She found herself “trapped” over there, as she puts it. She was left high and dry when her marriage broke down in her 50s.
“It was a time when I really didn’t know how it was going to end, and it was a really frightening time,” she told me. Even though she had a bachelor’s and a law degree from prestigious Georgetown University, and had previously worked as a corporate lawyer and a banker, she struggled when she tried to get back into the workforce after her career break.
It took her four years to get back to work full-time, being rejected from 80 jobs — including one to be a saleswoman at Neiman Marcus. At one point, a career coach advised her to take her law degree off her resume because she seemed overqualified for the kind of jobs they thought were still open to her. She refused.
Davis was selling off stuff to get by, including furniture (and jewelry). She had to borrow from her elderly parents. “I was living in a state of paralytic fear,” she said.
Hence the book.
Anyone over 50 — including men and women who have not taken a career break — can find it hard to get a good job these days, because of age discrimination that still exists, despite the government’s efforts since 1967 to curb the practice. But the job search is even harder for anyone who has been out of the workforce.
Actually, much of her advice is sound for both sexes. But it applies particularly to women for two reasons, she said. The first is that they often take a career break for family, and that hurts them financially. The second is that women face an even bigger retirement challenge than men, because (on average, of course) “we live longer and earn less.”
On average, a woman lives 5 years longer than a man. She will also be faced with an extra $200,000 in healthcare costs in her senior years, Davis points out. Yet — due to a variety of factors — she will earn on average 20% less, even during the times she is working. On average, a woman takes a career break of 8 years to care for children, Davis noted, citing published research. Oh, and the average Social Security benefit for a 65-year-old woman is just 80% of what a man would be making.
As a result, Davis pointed out, women typically have more need for a financial plan than men — but too often they choose to take a back seat instead. Both sexes are to blame, by the way. “A lot of times men are taking control, but a lot of times women abdicate,” she said. Davis noted there are a lot of cultural reasons driving these. (Among her tips: More parents need to talk to their daughters about money and finance.)
Women need to look out for themselves, Davis urges — because nobody else is going to look out for them. Here are some of her biggest tips:
“First of all, know your own finances,” she says. “You need to understand your inflows (and) outflows, understand your credit score… so you are fully organized. I always go back to the budget. Understand that.”
If you are working, “max out your 401(k).”
If you are married and taking a career break, contribute as much as possible each year to a Spousal IRA. The maximum limit under 50 for that is $6,000 a year — which is not much, but it’s better than nothing.
Maintain your own checking account and your own investment account. “It is essential,” she says. “Because what you are doing now will exponentially change your life 40 to 50 years from now.”
Oh, and she says prenuptial agreements and cohabitation agreements are essential for everyone, but especially women. It’s so important that she’s written it into her will: Each of her 3 daughters who is living with, engaged to, or married to someone else when she dies has to get a prenup, postnup, or cohabitation agreement before they can inherit a nickel.