Closing the Retirement Gap

How Women can create a Secure Financial Future

Times are changing at a rapid pace. We are now seeing:

• Longer life spans
• Fewer social security benefits
• Smaller pensions
• Increased responsibilities in retirement

Of course, these circumstances affect everyone. However, women may experience added pressures, which can impede their plans for a safe financial future. Women tend to be clear on their financial goals, but many do not take action. A lack of confidence and knowledge - along with more immediate priorities - are combining to sidetrack even those with the best of intentions.

Women and finances

Although most women admit to being concerned about their financial outlook, many continue to lag behind when it comes to preparing for retirement. And they know it. According to a recently released study on women and finance, a whopping 62 percent of women gave themselves a grade of "C" or lower when it came to their knowledge of financial products and services.

Some other key findings in this survey include:

• Only one in five women feels competent to make wise financial decisions.
• Forty-three per cent listed "getting out of debt" as their primary financial goal.
• In 2004, over half the women polled intended to save and invest more money over the next 12 months. 2006 data reveals that in the past 24 months only 11 per cent invested in stocks or mutual funds.
• Also in 2004, 41 per cent intended to meet with an advisor, while only 24 per cent actually did.
• Very few women have discussed the potential risks of needing long-term care with their parents (19 per cent) or children (14 per cent).
• Women understand life insurance, but are falling short in acquiring the coverage needed to protect their families. In fact, over two-thirds of those polled have no plan in place.

This study highlights a common behavioural pattern in women: putting the needs of others before their own. As employees, business owners, volunteers, wives, mothers and daughters, women typically place themselves at the bottom of the priority list, and consequently have little time to devote to financial matters. Unfortunately, procrastinating about retirement planning will leave many women out in the cold.

Some questions to ask yourself:

• Will I have enough money to maintain my current standard of living in retirement? What will my sources of income be? What role will government benefits play?
• Do I want to stay in my home after retirement or sell it and downsize? Is a reverse mortgage a viable option for retirement income?
• If my spouse dies first, will I be able to maintain my standard of living? Keep in mind that the retirement income of your spouse could be reduced or eliminated in the event of death. And many of us continue to have responsibilities for children, grandchildren or ageing parents into retirement.
• Do I have a plan if the need for long-term care services arises?
• Do I want to work during retirement? If so, for how long?

Knowledge is Power

According to the survey, a big "disconnect" exists between what women know they should do and what they actually do concerning their finances. One of the best moves you can make right now is to educate yourself on the basics. Take a weekend seminar. Search the Internet for information. Read a financial planning book. Speak to a professional. Investing a few hours in your financial education will pay big dividends in the future.

Use the following checklist to consider ways to ensure your future is in the black. Be sure to discuss these ideas with your tax and legal advisors to determine the best options for your situation:

• Contribute the maximum amount to retirement plans. Pay yourself first.
• If you are single, don't count on someone else to help you - look out for number one.
• If you are married, take an active part in household money matters.
• Establish a credit history in your own name.
• Ensure that your assets will be distributed according to your wishes with a will or trust.
• Review your insurance needs including life, disability and long-term care.

In all likelihood you will need more retirement income than you think and you and you alone are the one who must make sure it is there when the time comes. Even taking small steps in the right direction now will boost both your financial planning confidence and your bottom line.