A long life can be a blessing and a curse, and for women, living longer is part and parcel of having the chromosome, however, the gender pay gap ensures that women have lesser savings after their retirement as compared to men. Due to this reason, it is paramount that women must save more money than men, experts say about 20 percent or more of their earnings. In his book titled, ‘Smart Women Finish Rich’, author David Bach encourages women to save money, become investors just like his own grandmother who he says taught him all there is to know about money and savings. Bach says that women should save about an hour’s worth of pay each working day of their life which is equivalent to 12.5 percent of their gross income. He strongly believes that all women must save 20 percent or more of their earnings since retirement is pushed due to the fact that women in longer than men. Unfair? yes, but it’s a fact of life.
Women must ask themselves that if they lose their husbands to divorce or death, where will they stand financially?
Today, with the rising numbers of divorce in India and all over the world, women also have a higher tendency to become widows since men don’t live as long, women must be financially secure. Women need to ask themselves that if they lose their husbands to divorce or death, where will they stand financially? The truth is that women are crushed financially when it comes to divorces, they don’t come cheap, you know. Most women have no idea where all the money is, whether it’s savings, investments, safety deposit boxes, etc. Bach says, “The first thing that happens in divorce is that you fight over the money. You don’t get half of the money if you don’t know where it all is.”
Studies reveal that women have half the emergency savings that men have, and women today are retiring with $1 million dollars less than their male counterparts. Despite this, women seem to not want to talk about money issues, they would rather talk about their own funeral than money. Edythe DeMarco, a managing director for Merrill Lynch, says, “We need to break the taboo about talking about money. There’s a lot of anxiety that goes along with that conversation, particularly among women.” In addition to this, women tend to spend a bulk of their money on childcare and parenting rather than their own retirement. Even though women have a bigger tendency to save money than men, they are less likely to invest their savings as men do.
Therefore, women in India who are single, divorced, or have become widows struggle the most since they are the primary earner for themselves and their family. As a result, these women have a higher tendency to suffer from poverty, housing stress, and homelessness more than men.
Young women need to think about their financial future and retirement
If you’re a young woman thinking I am much too young to be thinking about saving for retirement; you’re not! Fran Troskie, investment research analyst at financial services firm RisCura says, “It’s an important message that doesn’t seem to have hit home yet: women need to save more for retirement than men do.”
The 2011 consensus of India revealed that there were nearly 74 million single women in India which include unmarried, divorced, separated and widowed; there has been a 39 percent increase in the number of single women between the year 2001 to 2011. Women earn 20 percent less in Indian as compared to men which make the Indian gender gap one of the biggest in the world. To add to this, Indian women work for lesser years than men due to taking breaks at the time of marriage and or childcare. When and if they decide to come back to work, they find that their current salary does not match their former.
Indian women must make sure that they secure their health insurance because health issues eat away at savings
There is no doubt that women need to save more as Financial Planner Pankaaj Maalde reiterates what Bach says, “Instead of 10% of their monthly incomes, they should save 20-25% for retirement.” Though it is difficult to save in the initial years of earning due to the temptation to spend. He also adds that “Get your asset allocation right. With a long time horizon, investing in debt is more dangerous than saving less.”
In addition to these, Indian women must make sure that they secure their health insurance, due to the high inflation of about 12-15 percent including the fact that there is a high of contracting diseases of the modern life. A health issue can easily eat into one’s retirement nest egg and therefore heaving health insurance can save this from being depleted. Also, women must work on their negotiating skills for a higher salary while also ensuring that they work well after their retirement since there a big chance they will live for the next fifteen to twenty years.
Only 52 percent of women said that they were confident in managing their investments
Research also reveals that while men are less likely to plan for the future or seek out professional financial help, women tend to plan ahead and have the desire to secure their financial future. However, women aren’t very confident in investing; only 52 percent of women said that they were confident in managing their investments while 68 percent of men said they were confident of the same. Tragically, millennial women are the least confident in this sphere.
The biggest rule is to live within one’s means because of no one simply accumulates wealth unless you’ve won the lottery. So, here to saving more and investing, of course.
Image credit: This is Money (UK)