4 Reasons Why Women Need To Focus on Financial Planning

23 MARCH 2020

Financial planning is important regardless of gender, although the issue is more pertinent for women due to several factors

Because women have been historically undeserved in the financial industry, it’s important that you seek out financial planning assistance early and often. Even if you think you’re adequately preparing for the future, remember that catastrophes could change everything. Even the smallest of life changes now could affect your financial freedom during your retirement years.

If you’re still putting off visiting a financial advisor, here are some more reasons to consider making an appointment today.

1. Longer Life Expectancy

In general, women have a longer life expectancy, compared to men. For example, women here live, on average, six years longer than men. There is a higher risk of them outliving their spouses. This means that more retirement funds are required to fund their twilight years. In the same vein, expenditures for a woman may be higher than that of a man. For the same standard of retirement lifestyle, women may have to set aside a larger amount.

2. Higher Divorce Rate

The divorce rate here has increased. The Women’s Charter notes that between 1990 and 2010, the number of civil divorces has more than doubled, from 2,178 to 5,433. In 2016, there were 7.614 divorces and annulments, a 1.2% increase from 2015.Divorce and separation pose significant risks for many women. While both men and women have similar savings levels, in a relationship, women are left with far less when the marriage breaks down. To secure their financial well-being, women need to upgrade their money management skills.

3. Gender Investment Gap

Females may save more of their disposable income than men, but they also tend to invest less of it. When they do invest, they tend to go for less risky assets than men. Women are more likely to hold a higher proportion of their assets in cash or low-yield savings deposit accounts, than in investments. Women also generally set aside less for their retirement funds than men. A smaller retirement fund, coupled with a longer life expectancy, further emphasizes the need for women to focus on financial planning.

4. Female Illnesses & Frailty

Females may be more prone to certain types of medical conditions and critical illnesses and may require additional insurance coverage. Insurance planning for women should be tailored with additional coverage for female-related cancers, such as breast/cervical cancer as well as for pregnancy complications. Frailty, which encompasses physical, social, cognitive aspects as well as joint diseases like knee osteoarthritis, also affects women more than men. This compounds the need for them to have adequate medical coverage. Women can also consider long-term care insurance such as ElderShield, as they might outlive their spouses. This sort of cover can help defray costs associated with long-term care, such as medication expenses, therapy and community hospital care.