Standing in line at the grocery checkout, a family friend began to bobble the egg carton in her hands. Disaster was averted when she and the elderly woman in front of her managed to trap the offending article between them before it hit the ground. They laughed, exchanged a few words and moved forward.
As the woman ahead finished with the cashier and picked up her bags, she turned back with tears in her eyes, “You’re the first person who’s spoken to me in three weeks.”
This led to them sitting down for more conversation, with the elder woman relating how her life had changed since her husband had died. The two women have become friends, meeting up for tea and shopping from time to time.
This tale was related to me by my in-laws as we were talking about whether managing money is different for women as compared to men. It is.
Saving for a longer life expectancy
Let’s start at the end. On average, women live about five years longer than men. While it is certainly a positive to be able to share extended time with family and friends, it presents a number of challenges. The prospect of a longer life has the built-in need to fund a longer retirement. And it’s not only the length of time that has to be considered, but also how that time is spent.
Take the traditional male-female relationship. A married woman will generally live through the waning health and end-of-life care of her husband. On top of the financial, physical and emotional demands, she has another half decade ahead of her. It could even be longer if, as was perhaps more common in past generations, she married someone older than her. Of course, a new relationship may blossom, but she has to be prepared for the significant possibility of eventually being entirely on her own.
Thus, her financial planning must anticipate being part of two end-of-life processes, with all their related costs. Even with the benefit of a helpful adult child or other family member when she is in decline, it is likely that she will require more assisted living services and professional support (and accordingly more associated cost) than was required in the care of her husband when she carried the load on a daily basis.
Ability to earn, capacity to save
Before even reaching that senior life stage, women face challenges in being able to save effectively toward that time. According to Statistics Canada, women as a group earn about 87 cents for every dollar earned by men. While the reasons are complex and the situation is improving, this is a systemic hurdle that women have to take into consideration.
Women may leave the workforce to raise children, reducing their income during the time they are away, and possibly affecting their career prospects. As well, women tend more often to be family caregivers to older generations, requiring periodic time away from work, and possibly indeterminate leave in some cases.
Whether these commitments are by choice or by the dictates of social pressures and labour forces (fair or not), they affect both current income and the ability to build savings.
What’s a woman to do?
Be intimately informed
As a woman, you must be informed about financial matters from the very beginning, as you are more likely to face the brunt of it at the very end. This is self-evidently true for singles, and more likely than not in traditional couple relationships as outlined above.
Start saving early, for flexibility later
Individual earning capabilities and family circumstances will vary, but having savings both in-hand and in-mind from the earliest point provides the best grounding to respond to challenges that may arise as life unfolds.
Invest with balanced intention
Those savings have to be invested while delicately balancing two competing priorities: you need to participate in market advances to build savings in your accumulating years, and protect against market retreats in your decumulating years so funds are there when you need them. Speak to a financial advisor to assure that your investment portfolio fits your risk profile currently, and is adjusted as circumstances change.
Be emotionally aware to be financially prepared
There is an old myth that men invest logically and women invest emotionally. While that stark distinction has been debunked, it is true that both logic and emotion influence money matters for all of us. Accept and listen to the emotions that can affect your behaviour, so that you can make informed decisions that best serve your lifelong needs.
Speak to your Meridian Wealth Professional for perspective on these important issues.