Women don’t need a different retirement plan; as saving for her is done by her husband! The only thing she plans is SHOPPING! This is what one of my friends said when we were recently discussing about my new job domain (i.e. financial planning). I was rapt by her statement because that was not true.
Women and men are way different from each other. Everyone will agree on this. So does a retirement plan requirement is different for both? Now you will say that investment basics will remain same. Allocation in Bonds, shares, stocks, etc will not change much for women, then how can a retirement plan for them be different?
Why she requires different retirement plan?
Do you know women live longer on an average compared with men? Many times women retire early due to their family commitments. Since she lives long and retires early she requires more money to be taken care of herself after retirement. Not only this, she needs to tackle many health issues as she ages which again requires regular cash flow. She also has challenge to maintain her living and keep up with nurturing home needs which costs huge. Hence we women need a different retirement plan. Though she require a better plan, most of time she end up saving very less amount.
How can she cope up with above difficulties?
Save early and Save more
Everyone wants to save more but I will like to insist all women to save more and save early. Now you will ask why to save early? Well as I already said women live long and retires early. Early and more savings will help her to save few extra money to make up for those jobless years.
Take right amount of Risk
Women tend to prefer low risk compared with men which is big NO-NO! Riskier investment will help to get better returns on money. Cash and bank FDs will surely help to get returns but are not sufficient. In case of riskier investments, if planned well and for longer time will give returns much more than bank FDs.Afraid of the stock market? Balance that insecure urge by investing more than normal in emergency fund (aka contingency funds). This will make investing in market bit less scary as emergency funds will act as cover.
Husband is saving for both?
Woman should sit with him when he plans. She should ask him to consider her life span with his while making a plan. If he is planning to save for 20 years after his retirement and say ladies in family live up to 98 years then woman should consider increasing number of years she is saving for.
Also women should consider the age gap between them and their life partner. If age gap is bigger then consider the proper asset allocation that match women’s age and not just of their spouse. Now you will ask when it is called a bigger difference. Well when woman and her spouse have 5 years+ age gap then it matters a lot to make a proper plan as both will have different ideas about when will they retire. In this case try to invest in mutual funds and equities that too for longer period of time.
Women should make sure that they are also active into family finances.Women tend to leave it on husband because they don’t understand money. In this case they should learn and be active. Remember we women live longer and eventually we need to take handover of all finances. It is better to learn today instead of suddenly worrying after losing loved one and run the risk of being taken advantage of illiteracy in finances.
What if woman is single?
Don’t worry. In this case, it’s crucial for women to plan their finances on their own. She should make sure that she is active in planning for her own retirement. She should save every month. She can calculate how much is enough for her to save. We women shouldn’t be afraid of riskier investments.
Ladies don’t be scared of financial planning. Learn and be active in planning your future! If need help you can always take a help from certified financial planners at www.moneyfrog.in. Guys you can motivate women to participate into family finances. It will empower her with safe future even without you.