The Female Financial Lifecycle
A wealth planner’s role is to understand each client’s very personal circumstances and discuss what is most important for them to seek to achieve their financial goals. How do wealth planning needs differ by gender?
Jane Stedman, Senior Wealth Planner, shares her wealth planning tips for women tackling big financial decisions at each decade of their lives.
20s: Develop a savings plan and an emergency fund to cover unexpected expenditure. Be sure to register for your workplace pension as you should then benefit from tax relief on your contributions – the earlier you start the better!
In the UK, the gender pension gap – the percentage difference in pension income for female compared to male pensioners – was estimated at 40.3% in 2018-19. There are many causes for this including pay differentials (the gender pay gap) and the impact of women working reduced hours or taking career breaks due to care for children or elderly relatives.
At this early stage in your life, take the first step towards ensuring your future financial wellbeing.
30s: Younger generations of women are more likely to accumulate their own assets, including property. Ensure that you have a Will in place so that any assets would be distributed according to your wishes in the event of your death.
Choosing to get married? Hope for the best, plan for the worst! Seek advice to ensure that your assets would be protected in case of divorce.
Think about saving to fund a potential career break or reduced income during any sabbaticals or maternity leave, should this be your intention.
40s: Women reach their professional peak earnings at an average age of 44, 11 years before men! What does this mean for your wealth plan? This is a time to accumulate as much into retirement planning as is affordable.
50s and 60s: Younger generations of women are more likely to have had exposure to managing personal wealth, having careers or running their own businesses. Yet they may nonetheless be susceptible to the ‘gender care gap’. Still it is more common for women to take on caring duties for relatives – including children, elderly parents or both! For such women, the practical burden that they (not necessarily unwillingly) bear is likely to impact their future financial status. They may have career breaks and miss out on opportunities to progress if shorter hour contracts are needed to balance their commitments.
Wealth management guidance should reflect your position and priorities. For example, in the UK, holding all of your financial assets in a pension could be restrictive if access to funds is necessary before attaining age 55, or age 57 from 2028. If residing in the UK, try to use your ISA allowance each year. While there is no tax relief on investing in ISAs, there are no further taxes on income or capital gains within the investment, or when funds are taken out.
70s+: Statistically women outlive men, an important consideration for retirement planning.
Surviving widows can be left to make important and potentially sweeping decisions about future finances, including the distribution of assets to facilitate inheritance tax planning. It is important to ensure that you are always included in any joint meetings with your spouse or partner and your wealth manager.
Separate meetings may also be of benefit to you, in order to discuss any areas of specific importance and concern. This could also apply if you decide to divorce in your later years and may not have had direct exposure to wealth management previously.
The death of a partner can result in major changes in social and living requirements. This is a time when gifting should be considered if assets outweigh income and capital needs for the survivor.
A comprehensive and well-considered wealth plan is the key to taking care of your wealth for the long term and for current and future generations. When giving wealth management advice to women of all ages, it is important that both similarities and differences between genders are championed.