The amount of wealth controlled by women globally has grown by 8%

An interesting story about Women and wealth was published in an online Malaysian Newspaper The StarOnline  in March of this year. 

A new class of women who are educated, employed and empowered are reshaping the region towards a more egalitarian and prosperous future.

The financial power now exercised by women is changing consumer and investment markets beyond recognition.

A report from the Boston Consulting Group estimated the amount of wealth controlled by women globally has grown by 8% annually from the end of 2009 to 2014, led by women in emerging markets.

The phenomenon of Asia broadly getting wealthier has a knock-on effect on the growing affluence of Asian women that is amplified by changing social attitudes, better access to education, greater social mobility and a new class of female entrepreneurs.

The Grant Thornton International Business Report showed China, with the highest percentage of women in senior management with 51% compared to 25% last year; the Philippines (37%); Thailand (36%); and Vietnam (33%) the only Asian countries joining the Top 10 ranks.

In Malaysia, 26% of senior management positions are held by women compared with a third across Asean.

Today, with more women in Asia getting the same opportunities in education and employment, they stand a better chance at achieving the kind of retirement they want compared to women in past generations.

In Malaysia, saving habits among men and women are almost equal with 47% and 46% respectively. Malaysian women also ranked 5th among 27 countries. The survey showed they have the discipline to budget and stick to it.

On overall financial literacy, Malaysian women ranked 7th among 27 countries.

On average, Malaysian women save 2.2 months’ worth of household income and men save 30% more than women on a monthly basis. A total of 32% of men also have a financial plan compared to only 28% of women.

HSBC Bank Malaysia Bhd retail banking and wealth management head Lim Eng Seong said “The financial emancipation of Asian women mirrors changing Asian demographics where they are beginning to earn substantial amounts earlier in their career, but they require greater substantial planning for old age.

“Our research shows on average women are still under-prepared for retirement, with 10 years of savings for 23 years of post-employment life.

“Women are still not doing enough to invest in their future and while they are disciplined budgeters, they lack the confidence when it comes to investing.

“Among our increasing affluent female customers, we see a pattern emerging that correlates with the average life cycle and life planning among women.”

He said characteristically, women plan and prepare more effectively for a crisis.

“For instance, a young woman in her 20s might start off conservatively by investing in property for its stable income, and between her 30s and 40s make inroads into the equities market to generate funds for education and family travel and by her 50s and 60s returning to property as source of retirement income or residence for her parents and adult children.”

HSBC senior wealth development manager Woo Chui Chui said, “Numerous studies showed women are more averse to investment risk and establish investment goals that put the needs of the family ahead of personal needs.”

“Typically, they shy away from uncertainty to avoid incurring large losses resulting in falling below a target rate of return.”

Women tend to exert stronger self-discipline in sticking to their strategies to avoid the common problem of over-trading as such, reduce the probability of so-called market timing, buying at the top of the market and selling at the bottom,” he said.

“The traits that make women successful are transferable to private investing where the most important first steps are planning, understanding one’s needs and appetite for risk and a continued dialogue with a trusted adviser to make sure they are on the right track to achieving their financial goals,” he said.

Your life, your money. Take control

The following story was written from the perspective of the Indian economy but the planning advice is sound and should be considered by all.

Financial planners are unanimous in saying that when it comes to making investment decisions, women rarely take an initiative. There is a sense of being overwhelmed by numbers and statistics which, say planners, women find difficult to digest. More often than not, they rely on other members of the family, maybe husband or father, to make investment choices. But social dynamics are slowly changing. More women are earning independently from an early age and, at the same time, getting married later than sooner. Then why not invest money independently?

A study commissioned by DSP BlackRock Investment Managers Pvt. Ltd and conducted by global research agency Nielsen across 14 cities in India in July 2013, found that only 23% of working women make their own investment decisions. The figure for single working women is even lower at 18%.

Making investment decisions is linked to financial planning. Although this may sound daunting, it is a simple exercise about allocating resources to achieve future goals. However, you need to approach it in context of your current and future routine. You can draw a broad outline of your finances based on the stage of life you are in now and then keep adjusting for changes as they happen.

The planning process

Planning has to be done around an objective. “There has to be a context to planning and investing,” said Suresh Sadagopan, a Mumbai-based financial planner.

The objective could be an important one like your 13-year-old child’s college education or it could be your desire to travel around the world. Objectives will depend on individuals and their lifestyles. But to achieve these objectives, you need to plan ahead.

For single earning women without any children, the objectives could be linked to buying a car or a house or taking care of elderly parents. For an earning married woman whose spouse is also earning, it could be all these and the need to plan for a child. There are a lot of expenses around childbirth and you can actually invest in advance to cater to some of these.

Many married women who are working may be looking to take a sabbatical when the baby is born. Therefore, investing to provide for the months without the second income is also important. Some of the gap can be compensated through planned investments.

But the one goal that is common to all women, irrespective of age and status in life, is retirement. Whether you have just started earning or have been doing so for 20 years, at some stage you will retire. And at that point, you won’t want to give up the lifestyle you are used to living.

Many women make their retirement their spouse’s responsibility. That’s not the best thing to do. According to Nisreen Mamaji, founder, Moneyworks Financial Advisors, a Mumbai-based financial planning firm, “While working women do give some thought to retirement, non-working married women almost never plan for their retirement. But it is important for them to at least be aware and involved in the retirement planning investments because in the eventuality of the husband not being there, she will have to manage her family and finances single-handedly.”

That’s not the only reason that women should plan their own retirement. “The way to look at it is different. Many women actually retire early to take care of their families and hence, have to plan for the gap in income which they were earning,” said Aditi Kothari, executive vice-president and head of marketing, DSP BlackRock Investment Managers.

Once your objectives and the context to your financial planning has been set, you can then decide the products through which you can achieve these goals. This could be an appropriate mix of various products such as fixed deposits, provident fund, equity and debt mutual funds, among other things.

Cater for contingencies

Other than investing to meet financial goals, you must think of contingencies. You could do all the planning, but in the event of unforeseen circumstances and loss of life, things turn around completely.

A loss of life can be covered through insurance. If you are a single working woman without any dependants, this may not be your primary concern. “Insurance is meant to cover financial dependency and it’s not needed if death doesn’t result in a financial loss to next of kin,” said Sadagopan.

However, if you are single and have a loan running, there is merit in being insured, at least enough to cover the loan amount so that the liability doesn’t fall on your kin.

Married, and children, make financial dependency really gain pace. “If both partners are working, insuring the loss of income in the unforeseen event of death for both is important,” said Mamaji.

Often, even a working mother doesn’t assign too much importance to her own life to cover the eventuality of death. However, if the family is accustomed to a particular standard of living that has been made possible thanks to the joint income, then filling that gap is important. Thus, insuring both earning members of the family helps protect the loss of income, which the rest of the family is dependent on.

If you are not working and your spouse is the only financial provider for the family, you need to be aware of how much insurance is there in his name. You need to know whether in the eventuality of the spouse’s death, critical aspects such as your daily lifestyle, children’s future education and marriage are catered for. Since he is the sole earning member, his death will create a big income gap for the family and this can be covered through term insurance.

The other emergency that may take place is health related. These are also hard to predict and can get exaggerated if there are unforeseen occurrences such as accidents. “Medical insurance is necessary for everybody, no matter the age and status in life,” said Sadagopan.

In a study, ICICI Lombard found that premium contribution by women towards health insurance increased by 38% in 2012-13 from 2011-12. Women even have the option of taking on medical insurance that has maternity benefits.

What should you do?
Financial independence for women can’t just be about earning their own money, but also about how they manage it and secure their and their family’s future, said Kothari. “Today, more women are earning independently but divorce rates are also increasing. Moreover, women tend to outlive men. There are good options for investments but many women don’t know what to do,” she said.

The foremost step towards financial planning is to become aware, which means understanding how you can make your money work efficiently for you over a number of years. The objective could be to ensure your family’s financial security, your retirement or even just your travel dreams, but the approach has to be to embrace a planned personal financial management and goal-based investing.

A part of being aware is to get the details right. Ensure that you name dependants as the nominees in these investments and insurance policies. Also, it is a good idea to work on a will when you know who you want to be the beneficiary of your investments. Even if you have no dependants, it may be wise to draw up a will so that your family does not have to bear the burden of any liability.

Financial control is the biggest tool in your hand. Use it, and use it well.

Written by Lisa Pallavi Barbora  Published Mar 2014 here.  

Women and Retirement strategies

My daughter lives in Australia and she is very close to the averages cited in this article, so the advice here is important for her and other young women.

According to the Australian Bureau of Statistics (ABS), average super balances at retirement for women is around $105,000. The average man, however, will retire with almost double at $197,000. What can women do to boost their super savings?

According to ABS sourced data released by ASFA in its report, 'An update on the level and distribution of retirement savings', there is also a strong gender gap when it comes to current super balances, with women having an average of $44,866, while men have, on average, almost double. The disparity is across all age groups.

The cause of this disparity comes from women often having different personal pressures during their working lives to men - career breaks to raise children, subsequent part-time work, an over-representation in lower paid jobs and time out of work to look after sick or elderly relatives.
How to boost super savings

• Start early: If retirement is still several decades away, you can make extra contributions to your super now and take advantage of time for investments to compound and grow, as well as recover from any short-term dips in the market.
• Consolidate your super: Consolidating any super funds into a single account can reduce your fees and make it easier to keep track of your super.
• Government co-contribution: If your total income is $33,516 pa or less and you make a $1,000 after-tax contribution to super, the government will contribute $500 to your super fund.
• The amount of government co-contribution reduces for every dollar you earn over $33,516 pa and ceases once your total income reaches $48,516 pa.
• Spouse contributions: If your spouse is less than age 70 and earns less than $10,800 pa, you can make a $3,000 after-tax contribution to their super account. This will qualify you for a tax offset of $540.
• Super splitting: A strategy that allows you to transfer a proportion of your pre-tax super contributions from the previous financial year to your partner’s super account.
• Couples who are married or in a de-facto relationship and include same sex couples can take advantage of this strategy.
• Salary sacrifice: An agreement or contract with your employer for some of your pre-tax salary to be paid directly to your super fund, before income tax is deducted.
• You don’t pay income tax on amounts you salary sacrifice to super. Instead your super contributions are taxed at 15%, which can be much less than your marginal tax rate.

Case study: Salary sacrificing before a career break
Tracy is a 35-year-old woman with $50,000 in super who earns $70,000 per annum,  plus employer super of 9%. She is projected to have $414,053 in super at the age of 65 if she works uninterrupted.

If, however, she takes a career break to raise children from the age of 40 until she’s 45, her final super amount will be a massive 14% less at $357,154.5

In order to avoid this problem, Tracy could add more to her super to catch up to the amount she would have achieved had she worked continuously.

If she plans ahead, she could salary sacrifice $5,627 pa in the five years before her break. However If she waits until after her break, she will need to salary sacrifice about twice as much – $10,608 pa – to close the gap and make up for the time she has missed.

Assumptions in the case study: Investment return (before tax, after fees) of 7.7%, inflation of 3% pa, salary increases of 3% pa, Super Guarantee of 9% pa effective super fund tax rate of 15%.
The advice given is strong, but this case study shows that the assumptions used are currently out of step with the reality of investing.  The authors assume a rate of over 7% which is not realistic in today's investment world, the also assume a 3% increase in salary a year when most workers are getting around 1 to 3%. 

Taken from a story written by Peter Wolfram on behalf of the Commonwealth Bank of Australia

In love, engaged, married, divorced, poor in old age?

In Germany, 10.8 percent of women over the age of 65 have an income which falls below the poverty rate. Divorce is one of the factors which can lead to poverty in old age.

"The impact on women varies significantly across the generations, and depends in particular on the extent to which they have been able to save for retirement during their lives," said Brigitte Miksa, pensions expert at Allianz. "And although, in the past, men had fewer gaps in their working lives, in the future, poverty in old age will probably cease to be a problem predominantly affecting women."

Statistically: Marriage at 29, divorce at 43

According to the study, fewer marriages, a rising number of divorces and an increased life expectancy fundamentally increase the risk that women of retirement age will have exhausted their financial resources.

In 1970, the average marriage rate in the OECD countries was still more than eight marriages per 1,000 people, but forty years later this had fallen to five. However, this does not necessarily mean that fewer people are entering into partnerships, but in any case, more and more people are deciding not to get married, according to Allianz. 

At the same time, the divorce rate followed a common trend in the OECD countries: In Germany, for example, it almost doubled between 1970 and 2010 - from 1.3 divorces per 1,000 people to 2.3. Statistically, German women get married around the age of 29, their marriages last for 14 years, and they get divorced at the age of 43.

Life expectancy is increasing at the same time. Again taking the German example, a German women's life expectancy at birth is approximately 83 years according to UN estimates. If we also take into account the current trends in the development of life expectancy, such as those brought about by medical progress, Germans - both women and men - will live much longer in the future than they do today. The Max-Planck Institute for Demographic Research in Rostock assumes that, in 2070, a life expectancy of 100 years will be the norm, according to Allianz.

In the future people will, therefore, have to save for a much longer retirement than was the case in the past. In view of this, a divorce can affect women very differently, depending on their generation.

The study concludes that, in the past, women from older generations were particularly vulnerable to a divorce, especially those who had perhaps never undertaken paid work, had no training, and whose career history mainly consisted of raising children and caring for relatives. Thus, in 27 of the 30 OECD countries, older women are at significantly greater risk (15 percent) of experiencing poverty in old age than men are (11 percent). The situation varies greatly in western Europe, and also depends on the safety nets provided by the different welfare states.

In contrast to this, today's 50 or 60-year-olds are comfortably off. Women in industrialized nations today are far better educated than their mothers were. They usually work, and thus save for their retirement provision themselves. They are entitled to social benefits, and can accumulate their own assets. Women's increasing economic independence is particularly important for those without financial support from a partner.

Women in their 20s can also provide for themselves financially today, as they work and are paid more fairly than women were in the past. However, opportunities for young people are increasingly limited, either due to the financial crisis, which means it is harder to make profitable investments, due to a high youth unemployment rate in many countries, or due to rising levels of personal debt.

In the future, according to the study, poverty in old age will probably not remain a problem primarily affecting women. Men who, for instance, have not undertaken work subject to compulsory statutory pension insurance for their entire lives, could even find themselves worse off than women, as could men who have been married and divorced several times and have a number of wives and children to support.

"Taking care of your own financial situation provides protection against this. It is important to be well-informed, and to constantly build up retirement provision throughout your entire life, to ensure that even a difficult situation such as a divorce does not eat away at your retirement provision in the long term," Miksa said.

The above was published by The FINANCIAL  in March.

Women should use these smart money retirement tips

The following was written by Edward Jones Financial Services  and posted: in March  here

Women everywhere still face challenges — and here in the United States, one of their biggest challenges may be to gain the resources they need to enjoy a comfortable retirement. So, if you’re a woman, what steps should you take to make progress toward this goal?  

Your first move should be to recognize some of the potential barriers to attaining your financial freedom. First of all, a “wage gap” between women and men still exists: The median earnings of full-time female workers are 77 percent of the median earnings of full-time male workers, according to the U.S. Bureau of Labor Statistics. Also, women drop out of the workforce for an average of 12 years to care for young children or aging parents, according to the Older Women’s League, a research and advocacy group — and this time away from the workforce results in women receiving lower pensions or accumulating much less money in their employer-sponsored retirement plans.

To give yourself the opportunity to enjoy a comfortable retirement lifestyle, consider these suggestions:  

• Boost your retirement plan contributions. Each year, put in as much as you can afford to your traditional or Roth IRA. A traditional IRA grows on a tax-deferred basis, while a Roth IRA can grow tax free provided you meet certain conditions. Also, take advantage of your employer-sponsored, tax-deferred retirement plan, such as a 401(k), 403(b) or 457(b). At the very least, contribute as much to earn your employer’s matching contribution, if one is offered. And every year, if your salary increases, try to boost your contributions to your retirement plan. 

• Consider growth investments. Some evidence suggests that women may be more conservative investors than men — in other words, women may tend to take fewer risks and pursue “safer” investments. But to help build the resources you will need for a comfortable retirement, consider growth-oriented vehicles in your IRA, 401(k) and other investment accounts.

• Talk to your spouse about Social Security. If your spouse starts collecting Social Security at 62 (the earliest age of eligibility), the monthly benefits will be reduced, perhaps by as much as 25 percent. This reduction could affect you if you ever become a widow, because once you reach your own “full” retirement age (which will likely be 66 or 67), you may qualify for survivor benefits of 100 percent of what your deceased spouse had been receiving — and if that amount was reduced, that’s what you’ll get. Talk to your spouse about this issue well before it’s time to receive Social Security. (You may also want to talk to a financial advisor for help in coordinating survivor benefits with your own Social Security retirement benefits.) 

• Evaluate your need for life insurance benefits. Once their children are grown, some couples drop their life insurance. Yet, the death benefit from a life insurance policy can go a long way toward helping ensure your financial security. Again, talk to your spouse about whether to maintain life insurance, and for how much. 

when Men and women retire different things happens

The following article was written about the Australian experience with retirement, but I think that the ideas could apply equally to other countries. Men and women are not that different the world over.

The story was written in the Sunday Morning Harold by Cosima Marriner in March of 2014

Men think about their bank balances or their health when deciding when to retire while women quit work when they need to care for their spouse or want to spend more time with their families, research shows.

Despite the different motivations for exiting the workforce, one in three couples plan to co-ordinate the timing of their respective retirements, according to the Melbourne Institute of Applied Economic and Social Research.

Researcher Diana Warren tracked retirement trends among couples between 2001 and 2008 and found 66 per cent of couples who had retired quit work within two years of each other. The most common pattern is for the wife to retire before her husband, and at a younger age.

Men who own their own homes outright, have completed year 12 and have a higher level of relationship satisfaction are more likely to retire. Poor health more than triples their likelihood of retiring. Yet neither health nor potential retirement income is a big factor in partnered women's decisions to retire. They are more influenced by caring responsibilities: Many women now over 50 have young grandchildren and elderly parents to look after as well as their spouses.

Ms Warren said the different considerations for women reflected the fact that men still tended to be the main breadwinners in couples.

In contrast, financial considerations were paramount for single women when deciding when to retire.

Ms Warren said couples' desire to co-ordinate their retirements had implications for policy debates, such as raising the pension eligibility age. "Whatever policy implemented that affects one member of a couple is likely to affect the other member, so the [ultimate] effect might be larger than anticipated," Ms Warren said.

However, National Seniors Australia chief executive Michael O'Neill advised couples thinking of co-ordinating their retirements to be honest about individual desires: "If one partner is not ready to retire, it's important to respect that rather than subsume it to what the other partner wants, which comes with a degree of resentment …"

The president of the NSW branch of the Council of the Ageing, Ian Day, said a person's health, independence, financial security, access to health services and network of friends and family determined their wellbeing in retirement.

"How you go in retirement is very dependent on owning your own home," he said. "If you own a house you can live on the pension. If you don't, you're destitute from day one. It's impossible to live in Sydney on the pension and rent."

More Australian couples are delaying their retirements. The Bureau of Statistics says 20 per cent of couples now intend to work until they are at least 70.


Read more: 

Finances not the only thing needing adjustment in retirement

As a man I enjoyed the following article from In the Suburbs  written by Steven Gaynes, published March 2, 2014 here

The best thing about being the token male in a weekly quilting guild of nine women, including my wife, is listening to some lively discussions about family and retirement. The discussion among some of the seniors last week was about dealing with husbands who have retired or are planning to retire.

Guys, if you've already retired, you'll find this feedback very enlightening. And if you're still working but figuring out what you'll need to survive financially, you'd better listen up, too.

Retirement for some of my female quilting colleagues hasn't been a perpetual walk in the park because their husbands had never planned what they'd do with their time.

One quilter had the floor for most of the evening, and the rest of us just commented as she told her story. Her husband had a busy work life, and when their four children were growing up, she often asked him to spend more time at home with the family. He politely reminded her that there were bills, a mortgage and other expenses, and he had to work hard.

She was frustrated, but she quietly continued raising the kids and eventually developed passions for quilting and volunteer work. While he worked, she enriched her life with friends, church work and other pursuits.

Now that he's retired, this husband wants to spend every waking minute with his busy wife. They shop together, although that's not always her choice. He's always around the house, which cramps her space, and what she thought was going to be an easy life in retirement often is a minefield.

Sadly, her husband has no male friends, no hobbies to take him out of the house and little motivation to try new things. She can't even escape to her sewing room for peace and quiet without her husband asking when she's coming out, she said. And she's often tempted to stay in there.

While she loves traveling with her husband, she is planning several getaways on her own with friends. She needs those for her mental health, she said.

Another quilter jumped in and said she's cringing about having her husband retire in 40 days. Thankfully, she pointed out, her husband loves to work on cars, so she's expecting that he'll be busy doing that. But he hardly knows his way around a kitchen, she said, and will probably expect to be served evey meal.

This woman has built a well-rounded, day-to-day routine of quilting, get togethers with friends and volunteer work. She doesn't want to waste a lot of time planning recreational activities if her husband becomes bored.

Listening to these stories, I'm happy to say that I have no intention of retiring anytime soon -- if at all. First, I can't afford to retire, but if I could, the last place I'd want to be is home and underfoot. Even now, my home office is at one end of the house. My wife is at the other end, doing some social work and sewing.

We both love quilting, but only together Monday evenings when our guild meets. The rest of the time, my wife will sew and quilt far into the night and is quite content to be alone in her private space on our lower level.

I have a lot of male friends and enjoy getting together with them for coffees, breakfasts and lunches when I have free time. I find those times together relaxing and interesting and we can talk about everything from sports to politics and relationships. And our wives like it that way, because they have their own circle of friends.

I've heard from friends, some of whom retired in their 50s, that while they dreamed of regular, extended vacations and wanted their wives to become available playmates, they quickly realized that retirement life was going to be a perpetual trip. Much as travel is exhilarating, husbands and wives needed time for a normal routine.

Listening to my fellow quilters, I've come to realize that planning for retirement goes beyond financial details. It demands that husbands and wives listen closely to each other as retirement approaches and really hear what each other's expectations are.

Part of the retirement plan must be that spouses will respect each other's personal spaces and established routines. Obviously there are so many other considerations, but maintaining each spouse's self esteem and independence should remain at the top of any couple's planning list to avoid trouble in senior paradise.

Women save less for retirement

The ideas here are from a post written by  by Paula Aven Gladych and Marlene latter and they highlight the problem in the United States.

Everyone knows that almost no one is saving enough for retirement these days. What may be a surprise is that women trail men in retirement savings by a hefty margin, and are more likely to default on loans from retirement plans than men. Women save less for retirement and are more likely to default on a loan taken from their retirement savings.But why does this happen? And, perhaps more important, what can be done about it?.

First, here are the facts, according a study from Aon Hewitt, which found that women not only save less — 6.9 percent compared to men’s 7.6 percent — and have average retirement balances of only $59,300 compared with men’s average balances of $100,000, but a third also fail to take full advantage of employer matches. Only a quarter of men fail to rake in as much as their employers will give. 

According to Olivia Mitchell, International Foundation of Employee Benefit Plans Professor at the Wharton School of the University of Pennsylvania, women fall behind men in planning for retirement for lots of reasons: “They earn less; have less time in the labor force because they take time out for families; they’re also less likely to have a company-sponsored pension or have the opportunity to contribute to a pension,” she said.

The problem, she said, is serious because women tend to live longer than men, “so they need more savings, if anything, to last a longer time.

These savings habits are the No. 1 reason women have a tougher time making ends meet in retirement, according to the report.

Women who have contributed to retirement savings throughout their career should have 11.2 times their final pay to meet  retirement needs, but are actually on track to accumulate only 8.6 times their final pay. That's a shortfall of 2.6 times pay. Men have a projected shortfall of only 1.9 times pay.

"Women face a number of challenges when it comes to saving for retirement including gaps in their career when they are not actively contributing to their retirement and longer life expectancies, said Patti Balthazor Björk, director of retirement research at Aon Hewitt.  "However, there are factors that women can control to boost their retirement savings, such as how much they contribute, how they invest over time and whether they keep assets within the retirement system."

As offensive as the idea might sound, women’s financial literacy is simply not as good as men’s. And that’s true, Mitchell said, across the globe, not just in the U.S. Citing the results of a global study that asked “very simple questions in about 25 different countries,” she said, “we have a pretty global picture of financial literacy differences.” And they are legion.

Women and men take loans from their retirement savings at the same rate, but women are more likely to default on the loan if they leave their job. Seventy-one percent of women who terminated employment with an outstanding loan defaulted on the loan, compared to 64 percent of men, Aon Hewitt found.

“Women are less likely to understand compound interest, which is central to things like credit cards, mortgages, student loans — you name it,” she began. They’re also “slightly less informed about inflation — there’s not too much of a difference there, but they’re (also) much less aware of risk diversification. That would lead women to put too much money into a single asset: a home, for example, and not to diversify across different categories.”

Another issue is that “traditionally women have relied on their partners or spouses to handle financial affairs, and even though that’s less common than it was 30 years ago, it’s still widespread.”

Women “don’t establish credit in their own names, or have a separate checking account; that makes it difficult to establish credit if and when they need it, such as in case of a divorce or the death of a spouse. They have no experience, and may not even know the pin number for the (husband’s) online account

Aon Hewitt recommends women take the following actions to build a better retirement nest egg:

• Invest more and begin investing earlier.
• Take advantage of employer matching contributions.
• Make the most of automatic features like automatic enrollment and auto escalation.
• Avoid taking loans from retirement savings.
• Take advantage of “help” tools.

Let’s not pretend the ‘bad decisions’ of women are to blame

This post by Richard Denniss speaks to the truth about women and retirement planning and the issue that women have less retirement income than men. He addresses the issues in Australia but the issues are the same worldwide.

The gap between the retirement incomes of men and women will never be solved by information campaigns, decision-making tools or new websites.Better information may help some women (and men) avoid the exorbitant fees charged by many of Australia's best known super funds by empowering them to switch to cheaper funds, consolidate lost super accounts, and make additional contributions, but this will not overcome the underlying structural flaws in the superannuation system which disadvantage women.

Women earn around 17% less than men who perform similar work. Women are far more likely than men to take time out of the workforce early in their lives to raise children. Women are far more likely to take time out of the workforce to care for elderly parents. And women are far more likely than men to work part time in order to make their households work smoothly. All of these factors have a massive impact on the ability of women to accumulate retirement savings.

Calculations by The Australia Institute show that an average woman who worked full time would have around $200,000 less in their superannuation savings than the average man, a hypothetical nurse who took time to care for her children and parents would have around $538,000 less and a hypothetical lawyer who took time out for caring would have around $457,000 less.

It gets worse. The way that superannuation is taxed greatly exacerbates the gap between the superannuation savings of men and women. Low income earners actually pay more tax on their retirement savings than they do on their ordinary income. High income earners, on the other hand, pay far less tax on their superannuation contributions than on their salaries. While the introduction of punitive rates of tax on the retirement savings of the poor might be expected to result in low income earners avoiding saving, the compulsory nature of super means that no escape is possible. While the poor pay penalty taxes on their super, the wealthiest 5% of the population reaps more than $10 billion per year in tax concessions.

The wealthiest 1% of income earners, around 140,000 people, receives more taxpayer support for their superannuation than the poorest 3.5 million people.

The current superannuation system makes the gap between rich and poor far greater in retirement than during a person's working life. But it wasn't always like this.

Once upon a time there were much tighter restrictions on the amount of money that could be put into the tax haven of super. Once upon a time the Liberals introduced the 'high income earner surcharge' to reduce the inequity in the system and, once upon a time, superannuation was taxed on withdrawal in the rare situation that a couple had so much money in their super that income tax was payable. Today people can, and do, withdraw a million dollars per year in income from super and pay not a cent in tax on it.

The idea that letting people with multi-million dollar superannuation savings pay no tax is 'taking pressure of the age pension budget' is as laughable as it is widely believed. Just how giving tax breaks to people who would never have been eligible for the age pension is supposed to 'save money' is typically left unsaid. Indeed, Treasury estimate that the tax concessions given to the wealthiest 1 % of income earners is far more expensive than simply paying them the age pension.

If Australia is serious about improving the retirement incomes of women then tinkering with superannuation has a very small role to play. Millions of Australian women have already made 'bad decisions' such as having children, working part time and caring for their elderly parents. Indeed, all women made the mistake of being born into the gender that gets paid 17% less. 

Nothing, repeat nothing, that is done to the super system will deliver significant benefits to the millions of women aged over 50 who, with up to 50 years of life ahead of them, can do nothing to fundamentally increase their retirement savings.

The only way to help women in retirement, as opposed to make them feel guilty for having made 'bad decisions' is to increase the age pension. While such an increase would be expensive, the cost is trivial compared to the enormous, and rapidly growing, cost of the existing tax concessions provided for superannuation. By 2016 the cost of tax concessions for super will have risen to $51 billion up from $30 billion in 2011-12.

Despite the enormous and rapidly rising cost of the tax concessions for superannuation, not only are such costs never blamed for 'putting pressure on the budget', the government has committed to making no structural changes to this most structurally broken of systems.
Australia is one of the richest countries in the world and we are at the richest point in world history. If we wanted to spend money to help boost the retirement incomes of women, or all retirees, we could do so. Instead we have chosen to direct tens of billions of dollars in tax concessions to those with the most, most of whom are men. We can change that if we want, or we can run seminars for women about how to make better decisions. The choice is ours to make.

Fnancial planning issues that tend to affect women

On average, women live longer than men and are paid less, and there are still other financial planning issues that tend to affect women more significantly.

Lower pay is a key issue. Despite gains by women in the workforce, on average, women are still paid 77 cents on men’s dollar. Over a lifetime, that can add up to $500,000. Women are also more likely to leave the workforce temporarily to raise children or to care for an ailing parent. While their jobs may be protected in such situations, they are often only offered unpaid leave. In addition to that loss of income, the time off work can reduce any pensions and 401(k) contributions and lower the amount the worker pays into Social Security for retirement benefits.

Among those who reach the age of 65, women see a life expectancy two years longer than men’s. Married women tend to outlive their spouses by about three years. While a long life is a blessing, it often includes a longer retirement, which needs proper planning. Women nearing retirement age may want to consider putting off retirement for a year or two to add to their savings and maximize their contribution to Social Security.

In addition to longevity and pay, women also tend to invest more conservatively than men. Of course, conservative investment strategies avoid the risk of loss in a volatile market, but one can certainly invest too conservatively. The key is to diversify one’s investments. Just as all one’s assets should not be invested in the stock market, neither should it all be in cash. A diverse portfolio can provide protection from loss as well as a good return on investment.

Finally, many women planning retirement do not feel well-served by the financial planning industry. In a survey, women ranked financial planners dead last among 60 industries (even below used car salesmen), saying they feel that advisers talk down to them or do not address their issues.

Awareness of these issues is half the battle in addressing them. A good retirement plan and estate plan, combined with careful attention to saving, can result in a comfortable and secure retirement for any person, regardless of gender.

So what are the options for when we retire?

 We all know that we should save for the future, and yet it’s so easy to put it off for another day.
 Initially the reason is that retirement seems such a long way off. However, according to Mary Waring, independent financial adviser and author of ‘The Wealthy Woman’ as time marches on, the reason we don't address it is often because we’re worried we don't have enough money, and don't really want to face up to the reality. So sometimes we prefer not to know.

 So what are the options?

 1. Rely on the state
 Many women think they are going to rely on the state when they retire. However, this soon changes when they hear that at the minute the state pension is £5,727.80 per year in England, in Canada Old Age security is about $6612.00 and in the US it is about 8700.00 a year. After paying all utilities (gas, electric, water, council tax etc) and food, that’s going to leave very little left. It’s enough to keep you off the breadline, which is all it was ever intended to do. But who wants to live just above the breadline after a lifetime of hard work?

 2. Rely on your husband or partner
 This is a common plan, but you need to check that the pension pot does infact have enough money in it for both of you. In many cases there is not enough to keep one person in comfort, let alone two.

 3. Rely on an inheritance
 Not a great idea when you consider you have no idea at what age you will receive your inheritance. Your parents could live to their mid 90s and beyond and you could be well past your planned retirement age at this stage.   Also, inheritance tax kicks in and this will reduce your inheritance significantly.  Another issue to consider is that, in the future, your parents may need long term care. And the value of their estate may be used to pay for it.

 4. Rely on your children
 Whilst many children would be very willing to help their parents, you do have to consider the state of their finances. Depending on their age, they may be saddled with an enormous mortgage and may, themselves, be struggling to find sufficient funds to cover their outgoings. There won’t necessarily be any spare cash to help you.

 5. Hope and pray
Hope is not a strategy. If you have this as your plan and realize when you get to retirement age that the plan hasn't worked, it’s then too late to do anything about it.
 It’s much better to have a separate plan and then, if the universe somehow gives you all you need when you retire, you’re going to be feeling very comfortable indeed.

 6. Do it yourself
 The most sensible option is to take responsibility yourself and take whatever action is necessary to save sufficient funds.
 If you retire in your mid 60s you will probably live for another 20-30 years. So, start planning as early as possible so you can enjoy your retirement years doing all the things you love to do.

 Here’s how to start:

 1) Maximize your government savings plans for retirement if you can, in Canada that means maximizing your Registered Retirement Savings plan or your Tax Free Savings Account Contributions. Talk to your adviser about setting up an automatic monthly deduction  If you have never saved before this will help you set up a savings habit. However the interest rate is very small so this option is purely to help you get into the habit of saving rather than to be used a long term plan.

 2) Once you are comfortable with how much you can save each month start looking at a stocks and mutual funds, which has the potential for greater growth than a cash account.

 3) There are significant tax benefits to investing in a pension plan. The limits as to how and when you can draw the funds are to ensure that money is actually available for your retirement rather than for use as general savings. 

 By putting a financial plan in place, as soon as you can - even if it’s later than is ideal - you will help secure your retirement years and ensure you’ll be able to enjoy them, rather than scrimping at every turn or asking friends and family for hand-outs.

Women need to stop relying on their partners when planning for retirement

Women need to stop relying on their partners when planning for retirement, according to FMS Group financial planner Christine Hornery in a story published in Australia Money Management magazine

Hornery said a large number of her female clients did not have enough money to enjoy even a modest lifestyle in retirement, adding they needed to take control of their own financial future early. 

“Many women are still tying their futures to the men in their lives and don’t consider what might happen if, for whatever reason, those men one day disappear,” she said. 

According to Hornery, women are doing very little at the moment with respect to their financial future, especially when it comes to engaging with a financial planner. 

“Even if women are doing something, as opposed to doing nothing, it is highly likely they could be doing it better with the help of a financial planner who can look at their situation from a strategic level,” she said. 

Many Australian women have a mistaken belief they must sacrifice the quality of life today to have a satisfactory standard of living in retirement, but taking up strategic advice long before retirement can make a huge difference. 

“Women are not prepared to sacrifice things like saving for a home, starting a family, going on holidays in order to have a comfortable living in retirement,” she said. 

“What many don’t realise is if they have a plan, they don’t have to sacrifice anything. They can live the life they want to now and at every stage of the life cycle. As women, we plan for special events in our lives - our weddings, our children’s education - but we don’t plan for the biggest event of all: our lives.”

WISER A Resource for women who are or going to retire

Wiser stands for Womens Institute for a Secure Retirement

Aimed at women in the US, there is good advice on the following topics, that could be adapted by women from around the world.

Their Mission

The Women’s Institute for a Secure Retirement (WISER) is dedicated to the education and advocacy that will improve the long-term financial quality of life for women.  As the only organization to focus exclusively on the unique financial challenges that women face, WISER supports women’s opportunities to secure adequate retirement income through research, workshops and partnerships.

About WISER
WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women’s retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

4 Reasons Why Women Need To Release Fears Of Stocks & Retirement Benefits

 Another story of interest to those of us who hope to retire some day written in Sept by  Rashida Maples, Esq.

According to numerous reports surrounding women and our relationships with money, one suggestion appears to be a main stay across most reports. It has been suggested for years that women lack confidence and are risk aversion when dealing with money, are not up to par with men’s negotiating for and understanding stock and retirement benefits. However, as many women are now competing with men in regards to positions with increased pay and benefits, the tide may be changing in this area.

As reported in a 2012 Forbes.com article, the following are key differences in attitudes about money between the sexes:

1) Women avoid risk more than men, which can prove damaging in the long haul. As women tend to mitigate risks more than men, it is suggested that we do not take full advantage of all of the rewards that may be reaped from investing in the sometimes-volatile stock market.

2) Women worry more about the effect of money on relationships. According to a survey by Campden Wealth and Morgan Stanley Private Wealth Management, 79% of younger “ultra wealthy” women are concerned that their wealth will complicate relationships with spouses, friends, and colleagues. It was assumed in this article that the same conclusions can be drawn for women and men in all income and net worth brackets.4 Reasons Why Women Need To Release Fears Of Stocks & Retirement Benefits

3) Women worry more about their financial health but lag in decision-making and self-confidence. An LPL Financial “WomenInvest White Paper” survey shows that 67% women want an equal role in financial decision making and only approximately 20% want their husbands to make all the decisions. Only 29% of women are confident their investments are “allocated appropriately between cash, bonds and stocks.” By comparison, 45% of men are confident in this area.

4) Women may expect different things from advisors than men. Financial “peace of mind” is seven times more important to women than wealth accumulation.

Though some of the previously mentioned sentiments may ring some sort of truth, there are several others who are seeking to debunk these “myths” about women and money.

It is safe to say that regardless of past assumptions, myths and findings about the relationship between women and money, as professional women with increasing pay and offered benefits, it is imperative to remain 100 percent aware and in full control of our financial futures, which may call for a reassessment of antiquated thinking and fears.

Rashida Maples, Esq. is Founder and Managing Partner of J. Maples & Associates (www.jmaplesandassociates.com). She has practiced Entertainment, Real Estate and Small Business Law for 9 years, handling both transactional and litigation matters. Her clients include R&B Artists Bilal and Olivia, NFL Superstar Ray Lewis, Fashion Powerhouse Harlem’s Fashion Row and Hirschfeld Properties, LLC.

Spotlight on Elder Law

Stories of interest from around the world for those planning at one point to retire. The following was written in September by Nancy J. Brady, RN, Esq

Women have made significant advances socially and economically. However, planning for major life events and retirement has not generally kept up with those advances.

Well established statistics show that most women outlive their spouses (80 percent). Additionally, women often play a caretaker role for elderly parents, as well as for grandchildren (“sandwich generation”). Divorce or widowhood may result in second and sometimes third marriages with children from prior marriages to be considered in estate planning.

Many women continue to rely on the men in their lives to support them, and make financial and planning decisions. It is important for women to become knowledgeable and aware of their specific retirement and estate planning needs.

Planning for the various stages and roles in a woman’s life will, naturally, be different for every woman depending upon her particular circumstances. As outlined below, there is basic planning that every woman needs to have in place at any age, as well as specific more advanced planning for different circumstances.

• Twenties and thirties: The basic estate planning documents need to be in place, which include Health Care Proxy, Power of Attorney and a Last Will and Testament. If total assets are in excess of $1 million, estate planning will involve planning to minimize estate taxes for your beneficiaries. If you are a parent, even if your estate is not quite that large, you should have provisions in your Last Will and Testament for your children — such as the ages at which you would like them to inherit, as well as your choice for guardian for the children. Aside from legal planning, financial planning for college for the children and retirement planning should be in place.

• Forties and fifties: Review estate planning documents whenever there is a change in your life circumstances (example: marriage/divorce/widowhood/inheritance). Make sure your elderly parents have their basic estate planning documents in place so that you may act on their behalf without delay if they become ill or otherwise need assistance. Consider purchasing your own long-term care insurance from a reputable broker who will structure a policy based on your individual (income and assets) needs. If your estate has grown significantly make sure your legal documents are structured to maximize estate tax savings for your family. Continually review your progress (with your financial advisor) towards securing your retirement needs, and your progress towards those goals. The meetings with your financial advisor should include deciding when to begin collecting Social Security benefits.

• Sixties and seventies: If you have not already done so, make sure to have basic estate planning documents in place (Health Care Proxy, Power of Attorney, Last Will and Testament). Update and make changes (with the assistance of your attorney) to any documents particularly if circumstances have changed since you completed the documents. Establish and implement a plan (with your attorney) to finance long-term care (home care, nursing home care, assisted living), whether you have a long-term care policy in place or not.

Financial literacy – women understanding money,

The following is taken from an article published in the Women s Agenda from Australia and from Benefits Pro.

We know that women are paid less than men and that they retire  with  less superannuation 

 In Australia, all workers contribute to a pension plan called  Superannuation.

Superannuation is predicated on time spent in employment, and the gross income of each member. So while the current median super balance of men aged 35 to 44 is around $41,000, for women of the same age it's $22,600. For those about to retire – 55 to 64 year olds – men have a median $91,000 compared to women with $55,000.

The problem isn't so much gender bias as structural inadequacy.

Women have different lives to men. They typically take time out to have kids, they work part-time when they re-enter the workforce, and in order to have flexibility with their family responsibilities, they often work on contract from home or they do informal work for cash. All of these choices take contributions out of their super.and other savings than men. And yet the great paradox is that they actually make better investors than men, so what's going on and how can it be addressed?

The Australian Government's study, Financial literacy – women understandingmoney, (PDF file) highlights a raft of differences in the attitudes, confidence and actions of women and men. Women are less confident with planning for their financial future and ensuring they have sufficient money in retirement. Significantly, 52% of women said that dealing with money is stressful and overwhelming. Many said thinking about their long-term financial futures makes them feel uncomfortable. Thirty four percent said that dealing with money is boring.

But that is only part of the story: it turns out that women actually make better investors.

A recent study by USA consulting firm Rothstein Kass, found that hedge funds led by women far outperformed the global hedge fund index in 2012. In fact, hedge funds run by women made an 8.95% return while the global hedge fund index returned 2.69%. That's well over three times higher returns compared to male-led funds.

The great American investment guru Warren Buffett is a legend due to his high investment returns over many years, and his home-spun philosophy. In August, his Berkshire Hathaway company reported a 46% increase in profit over the previous year.

Louann Lofton's recently published book Warren Buffett Invests Like a Girl: And Why You Should Too, is getting plenty of attention in the USA. She says that his success is partly because he exhibits many of the traits of women investors. Research studies have shown eight particular traits of female investors versus their male counterparts. These include exhibiting less self-confidence, trading less, being more risk averse and being more willing to learn from their mistakes.

So if women possess traits that potentially make them more successful with money and investment than men, why are they less confident in planning their financial futures? Why do they find dealing with money more stressful?

Australian-based research released in September as part of Smart Money Week, shows that family and relationships have a significant influence on most women's approach to personal finance.

"Our research confirms that gender very strongly shapes financial decision-making and well-being" said the leader of the study, RMIT's Professor Roslyn Russell. Women are very articulate about what they would like to do and achieve, but there is a gulf about how they are going to get there. Another thing important to consider, and why we need a special program for women, is that women don’t talk about themselves for financial security; they talk about the family. … There is often a lack of savings because women might be thinking or planning more for their children’s education instead of taking care of themselves. Women, in other words, are far more focused on taking care of others than they are on satisfying their own needs.

"Several women allowed all large financial decisions to be made by their partner or spouse, and in many cases this put them at significant disadvantage."

Professor Russell says that while financial literacy is important, it is not enough on its own to motivate women to make changes to their financial management habits.

So how do we address this conundrum? Perhaps we need to look at approaches that work well in other aspects of our lives.

Education is - as always - a great asset and a great enabler. Along with increased knowledge and skills, it engenders confidence. In addition to financial education, perhaps women should actively seek support and guidance from other women who are more experienced in finance and investing.

Aggravating matters, women’s low financial literacy and confidence keep them from seeking advice from, say, a financial advisor.

“People who are not comfortable or do not know,” said Lusardi, (Annamaria Lusardi, the Denit Trust Distinguished Scholar in Economics and Accountancy at GeorgeWashingtonUniversity) “will be less likely to use an advisor because they might not understand or be able to follow the advice they get. It’s the same as with health. I have heard so many times that women talk to the doctor and feel they are not listened to. They might think the same thing will happen with financial advisors, and then they will not consult one.”

Mitchell (Olivia Mitchell, International Foundation of Employee Benefit Plans Professor at the Wharton School of the University of Pennsylvania) and Lusardi both said that better financial literacy, beginning as early as possible, is one key to improving women’s savings rate for retirement. Education about the importance of the employer match in retirement plans is critical, said Mitchell, and for employers that still offer defined benefit plans, women need to learn what a lump sum vs. a lifetime payout can mean to them.

Women mentoring other women - in their careers, in entrepreneurship and running successful businesses - is now commonplace. Perhaps we need to look at the mentoring of women by women in money, attitudes, skills and investing to address the unpalatable facts that they retire with far less superannuation and other savings than men, and are more likely to rely on the age pension

As offensive as the idea might sound, women’s financial literacy is simply not as good as men’s. And that’s true, Mitchell said, across the globe, not just in the U.S. Citing the results of a global study that asked “very simple questions in about 25 different countries,” she said, “we have a pretty global picture of financial literacy differences.” And they are legion.

“Women are less likely to understand compound interest, which is central to things like credit cards, mortgages, student loans — you name it,” she began. They’re also “slightly less informed about inflation — there’s not too much of a difference there, but they’re (also) much less aware of risk diversification. That would lead women to put too much money into a single asset: a home, for example, and not to diversify across different categories.”