Top of Mind

Takeaways from the “A Time for You” Redbook and MFS Event

Last week, I had the pleasure of watching my colleague Emily Wrightson participate in the Redbook/MFS “A Time for You” event.  And what a treat it was, hearing four women —three of whom work in the financial services industry, as well as the editorial director of Redbook magazine — share their thoughts on addressing the unique financial challenges that women face!

There was a lot of good information shared - far too much to address in a single Top of Mind, thus, I strongly suggest watching the event in its entirety.  The panelists not only covered all of the basics (e.g., budgeting, Social Security planning, etc.), but also shared some nuggets of knowledge about which I was largely unaware, including:

  • The importance of negotiating that first salary — According to a study cited in the session, 57% of men negotiate their starting salary, however, only 7% of women do.  SEVEN PERCENT!  This directly relates to other financial considerations, such as retirement planning, since one’s first salary in the workforce is critical given the time value of money.  With a lower starting salary, an individual could potentially lose out on six - or even seven - figures in additional earnings over time.  Also, those with higher salaries may find it easier to save more earlier, which, as we know, is a key factor in retirement wealth accumulation. The good news is that 89% of those 7% of women who negotiated their first salary in the workforce were successful in doing so.  Therefore, if that 7% figure increases, it could be the single most positive factor in improving the financial outlooks of women in the salaried workforce.
  • Employee benefits are frequently under-utilized, resulting in money left on the table — While the retirement aspect of this did not surprise me — as someone who works in retirement plans, I am all too familiar with the fact that many employees do not contribute enough to receive their full matching contribution — the other benefit mistakes that were revealed in this session astounded me. For example, why would anyone pay more for the exact same life insurance benefit by purchasing it retail, rather than through their employer’s plan?  And, if someone is regularly going to the gym, why would they not seek reimbursement if their employer’s health plan offers it?  However, apparently, many women (46% of them, according to a study cited in the session) leave this money on the table, simply because they don’t take the time to review their employer benefits and are unaware that they are wasting money.
  • Don’t overlook HSAs as a savings vehicle if you’re eligible — The tax benefits are excellent (unlike retirement contributions, HSA deferrals are excluded from FICA taxes) and, if an individual’s short-term medical needs are such that he/she does not utilize the funds, it can be considered a form of long-term care insurance, as balances built over time can be used tax-free for medical expenses in retirement.  And, since women live longer than men, HSAs can be an even more significant factor in overall financial planning for women; a study was cited indicating that average retiree medical costs for women are 37% higher than for men, presumably due to longer retirement lifespans.

I hope that some of these takeaways from the session were as fresh and interesting to you as they were to me!

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Note: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

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