The fundamentals of financial planning are the same for both men and women, but often women face specific lifestyle and economic issues that require special attention. It is vital for women to ensure that the following scenarios are considered when planning for their financial future.
On average, women tend to live longer than their male counterparts. Life expectancy in most countries is improving rapidly due to advances in healthcare. According to the latest World Health Organisation data, the average life expectancy for men in South Africa is 62 years and for women, the average is 68 years. Statistically, there is a good chance that many women will spend their last few years without their partners. Healthcare costs across the world tend to increase at a rate greater than inflation. No matter where they live, women need to ensure that they provide additional retirement savings so that they do not outlive their capital.
When it comes to starting a family, women often have no choice but to take time out of their careers in order to have their children. This necessitates having to move in and out of the workforce at certain times in their lives. Sometimes a couple may decide that the woman will stay home to raise the children. This decision is likely to have a significant impact on her future earning potential as well as on the amount she would be able to save for her retirement.
Women also face unique medical challenges, such as cervical and breast cancer. Research undertaken in the United States revealed that 1 out of every eight women will be diagnosed with breast cancer during their lifetime. Just last week, we assisted a female client with a dread disease claim of over R2 million after she had been diagnosed with breast cancer. This form of cancer accounts for most critical illness and disability claims made by women. Threats such as heart attacks and strokes, previously associated primarily with men, have now also become significant risks for women. Surviving a critical illness or disability can be financially devastating for a woman if she does not have adequate resources or cover in place.
Sadly, close to half of all marriages across the world end in divorce. A recent study found that married people accumulate about four times more wealth than single people, while on average, divorced people usually end up poorer than single people. It is often more difficult for a woman to accumulate wealth after a divorce, especially if her career has been interrupted at some stage and she needs to re-enter the workplace.
To deal with these unique challenges, women need to take an active interest in their own finances. They should be encouraged to seek the counsel of an expert, someone they feel they can trust. An experienced Certified Financial Planner® will be able to guide a woman through the financial planning process and assist her to achieve the right mix of products, thereby providing her with peace of mind no matter what the future holds.
Rands and Sense is a monthly column, written by
Ross Marriner, a CERTIFIED FINANCIAL PLANNER® with PSG Wealth.
His Financial Planning Office number is 046 622 2891
