While the basics of good financial planning are the same for both sexes, women face particular lifestyle and economic issues that require special consideration. On average, women earn less, take more hiatuses from employment/earning, both for child rearing and caring for elderly parents; and, women tend to live longer than men. All of which often adds up to having less money that needs to last longer.
There is also much evidence that realizing goals and dreams is much more likely if you have a written plan. Benefiting from a long-term relationship with a wealth manager can help you stay on track.
Here are six considerations to help you put together a plan so that you are able to live your life, on your terms.
1. Set and prioritize your goals
Create a vision of what is important to you: how you like to spend your time and your money and who you like to spend it with.
There will be many demands on your money: retiring comfortably, educating your children, caring for elderly parents and supporting the causes you care about. Only you can determine what is most important to you and what you will prioritize if you have to make choices.
2. Work with the right advisor
Find an advisor with whom you feel comfortable. At the very least, make sure they prepare a cash-flow based financial plan for you. You need to understand whether you are on track financially to achieve your goals and if not, what revisions to the plan are necessary to reach your goals.
Given the time horizon women have to plan for, understanding whether or not you are on-track is important, and the earlier you develop a financial plan, the more time you have to make changes and, with the power of compounding, make a significant difference to the potential outcome.
We recommend referencing this list of 10 key questions to ask yourself when choosing a wealth manager.
3. Invest with greater confidence
On the whole, women tend to report that they are less confident about investing than men. As such, women tend to be more conservative in choosing investments. But being too conservative, not to mention shying away from the stock market altogether, can actually leave you more financially vulnerable since your returns may not keep up with inflation and your buying power could actually diminish!
Stick to the basics: Invest early; invest regularly; stay invested; and, diversify.
4. Protect yourself
Just as flight attendants instruct passengers to put on their own air masks before placing one on their child, personal financial planning requires the same protocol. Your financial survival depends on “paying yourself first” when saving for retirement. Once your finances are secured, then you can assess your capacity to help others.
If you’re married, you need to have a clear idea of what your spouse has in mind for his or her retirement. For instance, if your spouse decides to take his pension withdrawals early in exchange for a lower survivors benefit, this may have a significant impact on your income if he predeceases you and you receive a reduced benefit for the remainder of your life.
There are many considerations for women when it comes to health and wealth. We’ve summarized some of them in a convenient women and wealth planning infographic.
5. Set a limit on helping kids
Many feel it is important to finance their kids’ education, but it can be financially draining if you don’t plan carefully or if your financial circumstances change dramatically due to job loss/change or divorce.
Analyze whether paying for your children’s education will impede your ability to retire comfortably and maintain the lifestyle you want throughout your lifetime. Your children will have a number of working years to pay off education costs, you may not have the same time to catch up on retirement savings.
6. Plan for long term care
According to Manisha Thakor and Sharon Kedar, authors of On My Own Two Feet: A Modern Girl’s Guide To Personal Finance, “Eighty percent of men die married, while 80 percent of women die single.”
Your financial plan needs to include your expectations about who will help care for you as you age and what financial resources you will have available for your medical and personal care provision needs. You may want to explore long-term care insurance depending on how much assistance you can expect from family members and the fact that you can probably expect to outlive your spouse.
Taking these steps could go a long way to helping you achieve financial independence and control. We’re here to help you consider the foregoing and develop a financial plan that puts you in the best position to maximize your wealth and live the life you want.
This article is supplied by Joelle Hall of Hall O’Brien Wealth Counsel, an Investment Advisor with Richardson GMP. Richardson GMP Limited, Member Canadian Investor Protection Fund. Hall O’Brien Wealth Counsel specialize in tax-efficient portfolios and planning. We speak your language so you feel confident in the plan we implement together.
