Financial Milestones of Women’s Lives

Posted: Sunday March 7 2021

By: Guest Guest Bloggers

Financial Milestones of Women’s Lives

By Lisa Vaughan

I am a huge advocate of women becoming financially educated and taking control of their finances, but women often lack the confidence to talk about money, which is a shame when women face so many unique financial challenges during their life. Living longer, taking time out of work to raise children and earning less are among the obstacles that affect their earnings potential and ability to save.  Understanding these challenges and their impact is the first step a woman can take in taking over the reins of her financial future.

Caregiving

Women naturally tend to take on the caregiving roles and commonly take on the lion’s share of caring responsibilities for children, grandchildren, or elderly relatives.  And to do so, they may work in roles that are self-employed, flexible or with fewer hours and as a result, their salaries will also lose ground while they take a career break.  This impact on earnings during a woman’s life significantly reduces the ability to save for themselves and their retirement.

Divorce

Married women, understandably may have spent their life preparing for a joint retirement with their spouse and they may not have played an active part in the financial decisions being made with regard to retirement planning over the course of their working lives. But with a rising number of those older than 65 getting divorced, your best-laid plans could fall apart when it matters most. (1)

£9,000 is the average pension wealth of a divorced woman, versus £30,000 for a man. (2)

Later Life

Women often earn less, which means they have less money to save for retirement and yet they are likely to outlive their male counterparts.  On average, women retire with ⅕ of the pension wealth of a man at age 65 (2) and 66% of over-70-year-olds living alone are women. (3)

What can women do?

Planning early can stop women being financially disadvantaged later on and it’s never too late to get organised

Enrol in your workplace pension.  A lot of people opt out at that age because affordability is an issue. But, because of the power of compounding, even a small amount of money put away early can make a big difference later on.

National Insurance

If you’ve taken time out of work, for example, check to make sure you’ve made sufficient National Insurance contributions to qualify for the full State Pension – and if not, consider topping them up.  Check your national insurance record at https://www.gov.uk/check-national-insurance-record.

Review Pension Savings

Track down forgotten pension pots, understand what you have saved already and take advice to see how this will help towards your retirement goals. You can trace lost pensions via the UK government’s own free pension tracing service at https://www.gov.uk/find-pension-contact-details

Rainy Day Fund

Consider what you’ve got saved in cash.  Three to six months’ worth of expenses as an emergency fund is ideal – anything more might be better invested if you don’t have plans for the money.

‘What if?’

Think about protection. What if you were suddenly unable to do what you normally do at home or at work?  How would your family’s finances be affected should the worst happen?

Putting a financial plan in place should be a family affair with a partner included, although there is no substitute for asking questions, so taking professional advice is vital.

 

Lisa Vaughan FPFS

Chartered Financial Planner

www.lisavaughanfp.co.uk

 

(1) Jane Portas and Insuring Women’s Futures, Chartered Insurance Institute, 2019

(2)  “Marriage and divorce on the rise at 65 and over” ONS, 2017

(3) Families and Households in the UK: 2019, ONS, November 2019

Lisa Vaughan Financial Planning Ltd is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website www.sjp.co.uk/products.

# The Financial Milestones of Women’s Lives