Women in certain parts of the world may reach a life expectancy of 90 years just over a decade from now. This staggering finding published in the latest Lancet medical journal is a call to action for women to urgently rethink their approach to finance and to get busy planning for their retirement and healthcare needs, in particular.
René Roux, Head Distribution Marketing for Sanlam Personal Finance, says women will ignore longevity findings such as this at their own peril.
Roux says Sanlam’s data shows that in South Africa, a woman aged 30 today will, on average, live to 90 years, while a man of the same age will live to 82. Couple this with the escalating divorce rate in South Africa, which is still climbing, and it is clear that ‘a man cannot be a financial plan’.
“Women who take control of their finances are likely to experience the decision as bold and fulfilling; and will be empowered by the positive spin-offs. Just as in other areas of life, taking control of your finances allows you to move forward. In this instance, it means empowering yourself to build wealth and – perhaps most importantly – it gets you much closer to making your dreams come true.”
Roux says women can secure a robust financial future that makes the most of their income earned and ensures preparedness for retirement. She suggests the following as good starting points:
1. Partner with a Professional
Working with a financial advisor or broker who resonates with you and who you can navigate your financial path with is the best starting point. Women are generally very good at acknowledging the benefit they will receive from someone else’s expertise and financial advice is certainly a respected area of specialisation. It makes sense for women to call on these experts and to ensure that their financial journeys are well-planned and in capable hands.
2. Cover Yourself for Risks
Factors like longevity and the high divorce rate make it vital to protect your income and you need peace of mind that you will still be able to provide for yourself and your family, should you be unable to earn. Work with a financial adviser or broker on the following:
Life cover: Adequate life cover is crucial to ensure that your family will be financially secure. This is particularly important for women who have separated from their partners and are the primary caregivers of their children.
Disability cover: A study done by the University of Michigan in the US last year found that while women live longer than men, they also spend more of their golden years battling disability. If you are no longer able to work because of a disability or critical illness, will you be covered?
Emergency fund: No emergency fund is one of the prime reasons people end up heavily indebted. When unexpected expenses like a burst tyre, co-payments for medical emergencies or urgent visit to the vet crop up, most people have no choice but to use credit to fund these.
3. Make Sure You Have Enough for Retirement
Because women are likely to live longer than men they have a longer retirement period to fund. It’s therefore vital to start saving as early as possible. Yet, in formal employment, women often earn less than their male counterparts and tend to take career breaks to raise children. So asking women to save more under these conditions may seem like asking for the impossible. Most would need to choose between saving for retirement and other important goals like saving for their children’s education. If you have to choose, consider that you can borrow to fund your children’s education, but you will not be able to generate an income after retirement and therefore you cannot borrow for this.
4. Actively Manage Your Day-To-Day Finances
If you haven’t done so already, draw up a budget so you know exactly where your money is going each month. Carry less cash and leave your credit cards at home unless you need to make a planned purchase. Beware of luxuries dressed up as necessities and watch out for cash leakage. Decide on a realistic amount to spend on entertainment and personal expenses and stick to it.
5. Save, Save, Save
A very important money move is to try to free up spare cash for savings – so you can go on a trip, study further or just treat yourself to a manicure. It is not always easy, but there are clever ways to do it.