Women in many parts of the world have made tremendous strides in improving our overall financial outlook and closing the income gap with
men. During the last two decades, we have become better educated and more self reliant regarding our financial
future than our mother's would ever dream. For example. Today, more women are graduating from University than
men.
Although women's incomes and economic power have increased steadily over the years, we face many unique challenges
when it comes to planning for our financial future. We must be cognisant of the set of circumstances which set us apart
from others as we attempt to capitalise on our economic potential and secure our financial future.
Increased Lifespan
One distinctive and sometimes overlooked characteristic of women is the differences in life expectancy between men
and women. Typically, women can expect to live an average of seven years longer than men. This increased longevity for women creates several challenges that we must consider before we can build a sound financial
plan for ourselves. In many cases, because we are expected to outlive our husbands, we must plan for more available
income during our retirement years to maintain our lifestyle and independence.
In fact, due to advances in health sciences, we are living longer than ever before. Consequently, many retirees are
spending as much as twenty years or more enjoying their senior days. When asked, the majority of retirees felt their
number #1 concern regarding retirement, was the prospect of outliving their retirement savings. and future female retirees, the increased chances of a
long retirement should be an important consideration in addressing our retirement plan priorities.
Although more women have joined workforce over the years, we often still maintain the more traditional
maternal roles within the household, such as raising kids and being the chief caregiver to the entire family. We remain the
most likely family members to sacrifice career aspirations to provide care to elderly parents, children or disabled spouses.
For many women, living longer will also mean we potentially outlive our own primary caregivers-our spouses. It will also
increase our risk of needing the services of a nursing home facility due to sickness, injury. It is estimated that the majority of
women, over 50%, (as opposed to 33% of men) reaching the age of 65 will need nursing home care before they die. Although healthcare programs are designed to protect us in later years from big medical expenses, it pays for nursing home care only in
certain limited and very specific circumstances. With the average nursing home care facility running as much as $120,000 per
year, the cost of these services can have a tremendous impact on personal savings, lifestyles and in some cases restrict financial
independence.
Divorce Statistics
Divorce rates today also have a significant impact on our ability to create long term personal wealth. With
divorce rates as high as 50%, the results for many of us are a loss of income and often a dramatic change in lifestyle. As if the
psychological impact of family separation were not enough, many divorced women are unaccustomed to handling our own
finances and many of us do not have the confidence to take on the role of financial planning for our senior years.
Often after years of unemployment, many divorced women must re-enter the workforce in order to supplement or maintain
existing standards of living while continuing to provide primary child care responsibilities. As a result, women in this
circumstance are likely to find ourselves with access to fewer resources, limited years available to generate retirement assets,
and insufficient experience in dealing with issues of finance and risk planning.
Managing RiskAnother consideration for many women is how they handle the inherent risks we all face. In particular, the risk of premature
death or disability. This is especially true when it affects the primary income earner in the home. For homemakers, dependent on
a spouse's single income, the risk of financial setback is even greater. Although women in our situation are at greater risk, very
often there is not adequate insurance protection to ensure enough income replacement beyond the prime child rearing years.
Often couples are more focused on paying for college expenses rather than their retirement or their risks of income loss.
Moreover, many couples in this situation don't consider the number of years of female life expectancy in this equation when
considering insurance protection.
The consequence of inadequate insurance protection means that many of us are left to support our children without enough
income to maintain existing lifestyle. Many of us are forced to sell our home and uproot our children from our neighborhood,
schools and friends. Typically, we must now return to the workforce after being unemployed for many years.
Understandably this creates a shift in focus on immediate income needs and issues of retirement often become less of a priority.
In the majority of cases, providing enough income replacement protection is a result of poor advice or other priorities. However
many husbands are reluctant to provide adequate coverage due to negative perceptions and stereotypical ideas. In some cultures,
it is not unusual for husbands to reject the notion of insurance all together due to a feeling that they will be leaving their spouse's
wealthy and also may be providing opportunities for future husbands.
Additionally, there is evidence that some women are reluctant to insist that our spouses provide us the protection we need
despite the recognised risks. Ladies- in this situation we must understand how important insurance is in creating wealth and
mitigating risk for our families and particularly for ourselves. A suitably positioned insurance plan can often create an "instant estate"
and prevent unnecessary upheaval and the sacrifice of our retirement goals.
Retirement and Savings
Although the number of women who are working is increasing, we are less likely to work for companies that offer
retirement plans. Where we are offered employer sponsored retirement accounts, we tend to be more conservative investors and often
do not fully understand how to maximise our investments plan options. Women without access to employer sponsored
retirement plans, place ourselves at greater risk of dependence on government supported programs to
provide resources during retirement.
Over the years, retirement programs have provided us supplemental income for millions of retirees. However,
according to many estimates, the long term financial viability of these government led retirement programs is now in doubt. This will have a tremendous impact on
millions of Generation X retirees and women retirees who fit this age demographic.
Another important issue for women is the personal savings rates. Personal savings rates have been declining for years. This means we are actually spending more money than we earned. Part of the reason for
a smaller savings rate is that the banks are private institutions and are ultimately businesses operating for their shareholders. Governments and Central Banks have a limited ability to hold banks and financial institutions to account, especially since investments such as stocks,
bonds, and real estate have been performing well, there has been no need.
In addition, the availability of low interests, also discourage savings and encourage borrowing for big
ticket items such as cars and personal real estate. Economies run on consumption and we are encouraged by government and
media to spend at record levels to continue fueling our economy.
To Conclude
Building a sound financial future has never been an easy task for the vast majority of women. The task is now more
difficult than ever with the current state of the economy. The current economic slowdown only serves to
exacerbate an already complex and formidable undertaking. The current economic recession has given us wide spread job losses,
the meltdown of retirement accounts, rising inflation, budget deficits, and the potential for higher taxes. This has and will
continue, for the foreseeable future, to have a devastating impact on millions of us and our families.
Despite all the advances we have made, women must also carry the additional burden of longer life spans, high divorce rates, and lower saving rates. This
places even greater pressure on us, faced with building a retirement nest egg, to ensure that they will not outlive our savings and decreases the odds of achieving financial security.
The good news for many of us is that there are many financial strategies available to help us address these unique challenges
and put us in a position to create and preserve our wealth.
As we become better educated and financially savvy, we are realising that we do not have to go it alone.
This is why we created Femvestorsglobal, so we can support you on becoming financially fabulous and a confident money master.
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