A study conducted by Prudential, USA reveals that single women have a number of identifiable financial goals and high on their list is having enough money to maintain their lifestyle throughout retirement to cover health care expenses and to reduce personal debt. They also don’t want to become a financial burden on loved ones or outlive their savings.
And they define financial success as achieving a comfortable and financially secure retirement. In this article, we will look at how independent single women can go about planning for their retirement.
Cafemutual spoke to Amit Kukreja of WealthBeing Advisors and Vishal Dhawan of Plan Ahead Wealth Advisors to understand how to plan retirement of single women. Based on their inputs, here’s a lowdown on how MFDs can help single women plan for their retirement.
Contingency fund - It is imperative to have a contingency fund for adversities. Its quantum depends on various factors like the current life stage, expenses, EMIs, health insurance premium and so on. On a conservative approach, Amit recommends a contingency fund to cover 9 months of expenses. He further states that these funds may be parked in a liquid or overnight fund.
Integrated approach - An integrated approach is where you also take into account other goals along with retirement planning.
Many women are willing to sacrifice their life savings for other financial goals. As rightly pointed out by Vishal, the approach towards retirement planning must be integrated. Single women having children are more worried about planning for their children’s future. It is important to make them understand to have a balanced view. MFDs should convey to single women that they should not compromise their retirement savings to fund other goals. Instead, they should invest in a separate fund for other financial goals like children education. MFDs must also help such clients with succession planning.
Another key priority of single women is to take care of parents. Single women should plan for large expenditure in advance by understanding their cash flows, said Amit.
Single women without children or any other support should account for expenses of a house help that may become mandatory after a certain time. Further, succession planning for them may involve a trust, believes Amit.
Insurance coverage - MFDs should ensure that single women are adequately covered. Insurance coverage provides some cushioning during times of medical emergencies. If the woman has dependents, term insurance along with health insurance for the dependents becomes crucial
To conclude, MFDs must integrate the other financial needs of single women while planning for their retirement. They should interweave insurance as well as succession planning.
