Money facts women should know
Far too many women allow their husbands to handle the financial planning for retirement. In some cases, they don’t even know where their family RRSPs are located or the pension entitlements they may have.
This is usually a serious mistake. Consider the following:
- Women’s life expectancy is approximately six years longer than men’s
- 90 per cent of women will be entirely responsible for their own financial affairs at some point in their lives–most often through divorce or the death of a partner.
- Women earn less than 70 cents for every dollar a man makes.
- So women have to live longer on less money.
- One out of three women subsist at or below the poverty line.
- Having children often reduces a woman’s earnings and retirement savings.
- If a woman takes a year off to have a child, her contributions to an RRSP may be delayed because of a lack of earned income.
- Absence from the workforce may even affect her private pension plan.
- Female workers over 50 looking for employment have significantly lower chances than men of finding work.
- They have virtually no chance of finding or keeping employment after the mandatory retirement e of 65.
Some practical tips
But even with these tough constraints, every woman should do as much as possible to implement proper investment strategies with an eye to a comfortable retirement. Here are some practical tips:
1. Make it an absolute priority to know what’s happening with the family finances.
At the very least, find out where everything is–bank accounts, power of attorney, wills/living wills, insurance policies, debts, and assets.
2. Always keep a portion of capital completely liquid.
While everyone should have a readily accessible emergency fund equal to three months of living expenses, it is especially crucial for women to do so in the event of sudden death or separation from a spouse.
3. Don’t wait to learn about finances.
Often women wait until disaster strikes before they’re motivated into investment planning. Learn about your financial situation today, and you’ll be prepared to take over and control your finances down the road.
Separate investment plans
4. Have an investment plan separate from your spouse’s.
While spouses should coordinate their finances, women should have separate investment plans, bank accounts, and RRSPs. Assets can be tied up or frozen pending court settlement due to death or divorce proceedings.
5. Establish your own credit rating.
Start by opening your own line of credit and having at least one credit card in your own name. Remember, it wasn’t that long ago when women were often turned down for credit on the basis of their gender.
Today, while it’s illegal to discriminate because of gender, marital status, race, religion, or age, you may find some isolated holdouts who can make your life miserable.
6. Consider more aggressive investments, such as mutual funds, that are compatible with your own risk tolerance.
Because women live longer, they have to make their money work harder. While women have traditionally shied away from making investments they perceive to be risky, the irony is that they need the growth potential of equities. Historically, far more women than men spend their later years in poverty.
7. Lastly, and most importantly, go to ‘school’.
Read as many of the excellent personal finance and retirement planning books that are on the market as you can. Attend seminars, financial trade shows, and exhibitions and get referrals from friends about reliable financial planners.
Get financially involved
You owe it to yourself to become actively involved in your family¡¦s finances. Many women still do not get fair treatment in the financial world. So it’s crucial to become an independent individual, a person in your own right and in the eyes of your bank or trust company.
By leaving the financial decisions to someone else, you’re jeopardizing your own future.
Adapted from The Complete Guide to RRIFs and LIFs by David Tafler and Gordon Pape, published by Prentice Hall Canada.