When it comes to retirement savings and money management, women face different challenges than men. To take charge of your finances for women, here’s how to do it.
While men are from Mars and women are from Venus, women also face different challenges than men when it comes to retirement savings and money management. Therefore, it is essential to remember certain basic financial principles, which too many of them often forget, for lack of interest or a clear strategy.
A female reality
According to Statistics Canada, a 65-year-old woman can now expect to live another 22.2 years. “Women must focus on their retirement savings, even if certain situations can affect their ability to save,” explains Carine Monge, Director, Private Management, Sun Life Global Investments.
Indeed, women often save less and for less time. For most Quebec women, the accumulation of wealth is generally shorter due to various work stoppages during their working life (maternity leave, care of children or parents, etc.). Added to this is that many female professionals are paid even less than their male colleagues. “To reach the same level of savings as men, they have to save a higher percentage of their salary, which can be a challenge,” says Carine Monge. Finally, women are generally more cautious in terms of investments and seek to preserve their invested capital.
Adopt good reflexes!
So what can women do to save as early as possible in their working lives? “The most effective way is to pay yourself first, says Suzie Labbé 1, that is to say, to program the transfer of a fixed amount at each pay into an RRSP or a TFSA. And to increase it every year, as much as possible.” The good news is that once you start saving, it is scarce that you reduce your contributions; on the contrary. “The hardest thing is always to start,” remarks Carine Monge.
“When it comes to investments, women should be more aggressive and explore, with their advisor, products that could bring them better returns depending on their risk tolerance. In the current context of low-interest rates, they would benefit from revising their strategies a little according to their age and their needs,” continues Ms Monge.
At the time of retirement, the expected disbursements should be assessed. Thus, a woman who would prefer to secure a fixed income to cover her basic needs may be interested in a life-type guaranteed income annuity or long-term care insurance. “Women certainly live longer, but they also often live alone and with health problems in old age. And this entails costs that we do not always see coming. A place in a private residence for the elderly can cost $4,000 per month or $48,000 per year,” recalls Ms Labbé.
Common mistakes to avoid
Avoid the “willful blindness syndrome” and procrastination: pay your balances due on your credit cards and quickly schedule an automatic transfer to your retirement savings. An advisor can enlighten you on the best investment vehicles to choose.
Budget in such a way as to have a “piggy bank” that will meet your two needs: save for your security and spend when you want!
