Retirement planning is an important goal in every individual’s life. The general belief is that women tend not to give serious attention to this topic as compared to men. In this article we will look at how single women (unmarried, widow or a divorcee) who don’t have support of their spouse’s income can go about planning for their retirement.
Here’s a lowdown on how financial advisors can
help single women plan for their retirement.
Start
early
A study conducted by Prudential, USA reveals
that 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, financially secure
retirement.
Needless to say, like men, single women need to start saving for retirement as early as possible. “It is important to save 5-10% of your income for retirement,” points out Tejal Gandhi of Money Matters.
Mimi Partha Sarathy, Managing Director, Sinhasi Consultants says that starting early helps women when they take a career break. “By starting to save and invest early with a clear plan and focus, they can also buffer their plan when career and earning breaks happen for marriage, pregnancy or taking care of their young children.”
Educate them
While women might be good at managing their
day-to-day finances, they might not be on top of all the developments happening
in the financial world. “Women respondents generally assign themselves a grade
of C for their knowledge about saving and investing for a child’s education,
generating an income stream in retirement, investing and, in the case of single
and divorced or widowed women, saving for retirement,” states the Prudential
study.
Thus, financial advisors should simplify
finance for women. “The financial world is filled with jargon and advisors need
to demystify finance for women clients,” adds Tejal.
Health insurance
Women generally tend to outlive men and thus it is important for them to have a health insurance.
While
gauging the confidence level of single women for their preparedness to meet
healthcare costs, the Prudential study finds that women are less confident that
they will be able to secure long-term health or nursing home care for retirement.
“The
retirement phase comes with health care costs which can drain single women’s
savings. Thus, it is essential for single women to buy a health insurance which
needs to be quite substantial,” recommends Tejal.
Think
about your goals first
Women tend to be emotional and they often help
others thereby putting their finances at risk. “While it is important to save
for children’s higher education and take care of your parents they should not
neglect their retirement. Before helping others, they should make themselves
secure,” cautions Tejal.
Dilshad Billimoria of
Dilzer Consultants explains, “The biggest challenges faced by single women are
taking care of their parents and children. This adds emotional and financial
burden on them. Single women must plan for large expenditures in advance, by
understanding their cash flows and thus having a budget in place.”
Where to invest
Nisreen Mamaji of Moneyworks advises that single women should invest in an asset class which offers high liquidity and has the potential to optimal returns “Single women must not invest in NPS schemes or pension schemes approved by IRDA. Instead, they should opt for a least expensive and liquid product so as to meet any emergency. It is always advisable for single women to invest in diversified equity funds.”
Professional help
The Prudential study found that women do not tend to seek out financial professionals to help them achieve their goals. “Women are increasingly are making the financial decisions in their households. Nearly half of women—44%—are the primary breadwinners in their households, and 27% of married women now say they “take control” of financial and retirement planning and manage it themselves, up from 14% in 2006,” finds the study.
“Women
generally don’t understand financial products so well and therefore they should
hire a professional financial advisor instead of investing on their own,” advises
Tejal.
Let us know your thoughts.
