Longevity is an accelerating macro trend. World Economic Forum (WEF) research shows that we now live a decade longer than our parents’ generation and two decades longer than our grandparents.
Internal statistics from retirement income specialist Just indicates a total life expectancy for a 65-year old to be 87 years for women as opposed to 82 years for men, with 25% of women at age 65 likely to reach 94 and a further 10% living to celebrate their hundredth birthday. Earlier this year, the WEF also co-launched an initiative that aims to mobilise ‘thinking and action to strengthen financial wellness’ for the 100-Year Life.
Just Product Actuary Twané Wessels says that women underestimate their longevity, with research highlighting a disparity of 5-7 years between actual versus expected life expectancy. What’s more, despite the probability of living longer and outliving their male counterparts, fewer females tend to do adequate financial planning to ensure a comfortable and sustainable retirement.
According to Lynda Smith, CEO of online community platform 50Plus-Skills, many married women still seem to leave much of the retirement planning process to their husbands and do not have their own or a collective view of planning for the future. “Women on their own in this season of life are often fearful about not having enough savings,” she says. “Frequently this is due to a divorce or to single parenthood, which puts women under significant pressure to meet monthly financial commitments and causes anxiety about running out of savings down the line.”
“Alarm bells should ring,” adds Wessels, “because in addition to needing more money for living longer, in pre-retirement women often have less time and income to accumulate sufficient savings.” This may be due to temporary absence from the workplace for maternity leave or to care for children or elderly parents, and may also be as the result of sacrificed earning potential because certain jobs or roles with demanding time and travelling requirements are difficult to sustain alongside family responsibilities. Fortunately, the recent work-from-home requirements encourage remote working possibilities. This can allow for more flexibility and may help women in particular achieve more of a work-life balance.
Ensuring financial security in retirement tops the list of concerns for most people, gender aside, insists Jennifer Nedzamba, a financial planner at Netto Invest. However, Nedzamba agrees that the unique circumstances women face and society’s view on traditional gender roles within families and family financial planning, adds to the anxiety some women feel when it comes to their finances.
“Considering some women tend to leave the management of their family’s finances to their male partners, and often outlive said partner, it is crucial that women get involved and a plan is in place to ensure sufficient retirement income that keeps up with inflation to maintain their standard of living, even after the passing of a partner,” she cautions.
Wessels, Smith and Nedzamba agree that many women have not yet grasped the concept of longevity fully, and as a result have not planned adequately for retirement. In light of their shared experiences and expertise, and to help create awareness, they offer their top considerations for women approaching retirement.
Live and work for longer
“Women must reimagine their future with an open mind to remain connected, teachable, relevant and involved in work, as long as health allows, says Smith. “This does not mean remaining in full time employment, rather enabling a life in retirement consisting of pockets of work that keep you going financially and contribute to your pension pot.”
Take control of your own financial planning
The time for women to take a more active role in financial planning is long overdue. “It is important to educate yourself on money matters, be aware of all retirement options available and understand the impact or consequences of any decisions taken,” says Nedzamba. “If you don’t have a financial plan already, uncertain times like these might just be the catalyst needed to get something in place.”
Wessels recommends partnering with a trusted professional who focuses on a holistic approach to financial planning. “An independent financial adviser should take time to understand your unique circumstances and needs in order to recommend an appropriate annuity strategy. Most importantly your retirement strategy must provide a sustainable income that covers your basic needs for life. The balance of your retirement savings can be invested to allow for discretionary spending and to leave a legacy. It is possible nowadays to blend life and living annuities to achieve this desired outcome.”
PERSONAL FINANCE