Women and Retirement – Some Points to Consider when Planning for Retirement.

Oct

10

Expat Women

Women often have smaller pensions…

Statistics show that on average women still earn less than men. Reasons can vary, for example it can sometimes be the result of taking career breaks to bring up children, of following spouses for their careers or perhaps to care for elderly relatives.

If women do start working again after a long career break, they are often forced to take lower-paid jobs. As a result of this, and the missed years of contributions, their pension pots end up being significantly smaller when they retire.

…Yet women live longer

Women have a longer life expectancy than men and so in reality often end up trying to manage for longer on a much smaller pension than men. For example, in the UK the life expectancy for men is 79.1 years and is 82.9 years for women (Office for National Statistics 2015-2017).

In many instances, women rely on their spouses financially… especially in an expat environment

Historically, for many couples the husband was the principal earner in the family, while the wife often juggled a part-time job with family duties or chose to look after the family full-time. Although times are changing in this respect, many women do still find themselves in a situation where they are not financially independent and this financial reliance on their partner can often continue into retirement.

Don’t rely on the government to fund your pension

Governments are freezing pensions and pushing the responsibility to save for pensions onto the individual. Planning for retirement and investing assets according to your appetite for risk is essential.

…What if the unexpected happens?

Separation, divorce, sickness or outliving a spouse could mean that women end up struggling financially, without a well-structured plan in place.
Start planning for retirement sooner rather than later.

Become financially independent

It is key for women to start taking an interest in their savings and pensions and take responsibility for their future. This will enable them to become more confident and financially independent – it’s not as difficult or frightening as people often imagine.

Start saving early, and plan for retirement

It is never too soon to start saving for retirement. If you are earning, then saving 10-15% net of income is recommended, so it’s a good idea to start setting what you can afford aside monthly and to consider starting a private pension. One important piece of advice: the first payment of your salary should be made to yourself. More importantly – save as much as you can when you are young and get into the discipline of saving. Even if you have a small amount, the compounding effect on your savings means you will maximize your growth potential.

Arrange a free consultation with an Independent Financial Adviser. It’s essential to understand how much is spent each month and to have an idea of future retirement costs and expectations. Expenses can be divided into ‘essential’ and ‘if possible’ and things such as health care costs must be taken into consideration. By breaking down future needs, the size of the required pension can be estimated and the amount to be put aside determined. Reducing current spending may be necessary to ensure the desired income in retirement.

Determine goals and understand risk profile

Once it is known how much money will be needed in retirement, investment goals can be set. What are the growth objectives? Over what time period will funds be invested? Has the investor’s appetite for risk been determined? This could vary depending on what stage of life an investor is at, or on their general personality type. A younger person may be willing to take more risks in order to maximise the growth of their pension pot, but an older investor may need to start cashing investments in soon (and therefore be more cautious).

Invest intelligently

Once goals have been determined and a savings plan put in place, it’s time to start investing to grow the pension pot. Again, speaking to an independent financial advisor to get individual and expert guidance is a clever idea.

Click here to arrange a free consultation with a Forth Capital Adviser or call +41 22 311 1441

 

Trudi Hayes

The Author

Trudi Hayes

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