Retirement Planning for Women | ADW Accountants and Business Advisors

Why a married woman should have a separate retirement plan

Is it recommended to have a combined retirement plan for a married couple? Yes and No. Retirement is a major financial and life-changing event of anyone’s life but requires more planning than any other type of investment. Married or committed couples might think that having a combined retirement plan would suffice their individual as well as joint needs, but the story is far more complicated than it seems.

In this section, we are going to focus on why having a separate retirement plan is important for a woman, and how it can benefit both the partners in the long run.

Women are from Venus

Quite literally, and theoretically. Women have different needs, different life cycle and of course, their idea of pending their retirement years would be very different from that of their partner. Yet, 95% of married or committed partners choose to go with a combined retirement plan. While in most countries, the needs of both the partners are taken into consideration when designing a retirement plan for them, but in depth a lot of factors are missed out that often play a crucial role in a woman’s life. Let’s take a look at these factors:

Longer life: According to Population Reference Bureau, women outlive men, around the globe.In developed countries, the average life expectancy for men and women is 72 years and 79 years respectively. In developing or less developed countries, women can expect to live an average of 66 years, compared with 63 years for men. Read the full study here. Perhaps there is a substantial need for financial fortification for women. They are the ones to be using the kitty built for retirement for a longer time.

High healthcare costs: When it comes to planning for health-care expenses, most couple retirement plan takes into consideration the general average cost of healthcare expenditures in the country. However, according to the Department of Health and Human Services, women pay an average of 20% higher healthcare cost in retirement, compared to men. Longevity is the main reasons for this gap.

Fewer Work Years, Less Savings: Let’s face it, every woman, at one point of time in her life has to take a break from her career due to a number of reasons like pregnancy, family responsibility or her own health. Therefore, they often miss out on opportunities to save for their retirement corpus.

Gender Pay Gap: No matter how progressive the world gets, Gender pay Gap is one of the biggest contributors to low retirement corpus for women. Recent figures published by the Central Statistics Office suggest the gender pay gap in Ireland is approximately 14%, i.e men get paid 14% more than women in all member states. This means that even if a woman started her career at the same time as the man, saving the same percentage of money for her retirement, for the same number of years, she would still be saving 20% less compared to her male counterpart.

Marriages are not for forever –  There is a possibility of getting divorced or widowed with children. These scenarios can partially or completely change the equation and the retirement kitty. To make sure that you are able to live an independent and comfortable life post-retirement, you need to be proactive about handling your finances.

What women need to do

To begin with, don’t put off retirement planning. Having a joint retirement plan may not be a bad idea, but putting all your eggs in one basket is. Have a separate retirement plan for yourself too, where you can be confident and comfortable about your whereabouts in the future. For instance, if you are putting 250 per month toward your retirement fund, it is advisable to split the amount into 60% and 40%. You can choose to put 60% into your personal retirement plan and contribute the remaining 40% toward the joint retirement plan, or vice-versa.

Speak to your spouse about how retirement planning will impact you differently and discuss how major life-turning scenarios, unexpected ones, in particular, could further complicate the situations for both of you. Remember to plan your portfolio in such a way that benefits both the partners in the long run. The power of compounding works wonders if you know where and how to invest. So start early and save regularly.

Don’t know where to start? Confused about which retirement plan works best for you? Schedule your free first no-obligation appointment with the experts now. Our team of accountants and advisors can help you find the most suitable retirement plan.

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