In a recent global poll by UBS, they found that women are ‘acutely aware’ of their financial needs in the long term. The top three needs were identified as follows:
- Retirement planning – 76%
- Long term care – 72%
- Insurance – 68%
Considering this, you would think that the figures would be similar for women taking the lead in managing their own long term financial planning; and you would be wrong. As, in the same report, only 23% took charge of long term financial planning, with 58% deferring to their spouse for critical long term decisions.
Reading this report, I was not surprised. The majority of my clients are men or couples (where the man takes the lead on major financial decisions, however, he will defer to his wife for the household budget), with single women (and I include those who are in relationships but not married) in the minority. The reasons for this range from the perceived understanding that men typically know more about investing, to women thinking they are bad investors. Let me tell you this, some of my best clients are women, as they are less likely to want to sell under performing funds than men, and therefore are more likely to take advantage of compound interest.
Though it is easier said than done, women need to take a more active look at their own financial planning. The reasons being:
1. Women still live longer
On average, women tend to live four and a half years longer then men; this figure can widen when based on lifestyle and family history and therefore they have to put aside more for their retirement.
2. The earning gap
Whilst great steps have been made in shrinking the earnings gap in some fields, in other fields they have either stayed the same or even widening. Women are also more likely to work part time as well. This obviously means that women have less to put away for their retirement than men.
3. Career breaks
Women are more likely to take a career break than men – whether it is maternity leave or time off to take care of an elderly relative. The outcome is the same. Your earnings potential can be severely affected.
Regardless of what you may see in the media, on average, women are more severely impacted financially as a consequence of a divorce, than men. This may be a result of men either being the sole breadwinner, or earning significantly more than his wife.
5. Conservative Investors
When investing, women are more risk averse on what they do invest, than men. Potentially missing out of greater gains.
6. Involvement in Financial Decisions
Research shows that when women are involved in financial decisions, 91% report that they are less stressed about their finances and an even larger amount report that less mistakes are made.
Clearly, having the confidence to speak to either your partner or a financial adviser about your financial planning can greatly alleviate the stress and confusing options that are ahead of you.