The path to financial independence can be much different for women.
On average, women live longer than men, earn less than their male counterparts and are more likely to dip in and out of the workforce to have children or take care of elderly parents—all of which can curb their earning potential and ability to save for retirement.
Women who become widowed or divorced are also likely to face increased costs to support themselves and their families, which can erode their longer-term financial goals and security.
Regardless of the investible asset level, women are too often steered by professional advisors towards more conservative options, which can stunt their portfolio growth over time.
All women—whether single, married, divorced or widowed—need to be aware and prepare for these potential financial hurdles, says Tiffany Harding, vice-president and head of wealth planning at Gluskin Sheff.
It starts by getting educated about your finances—including what you own and earn—and finding the right experts to help you leverage them to reach your wealth and retirement goals.
“Women need to take control of their financial lives,” Harding says. “Don’t be a statistic. Take the first step by educating yourself about money and investing. It’s a cliché, but knowledge is power—and that includes earning power.”
Women and financial literacy
Too often, Harding says, women wait until a setback such as a job loss, divorce or death of a spouse forces them to take action.
“Many are afraid to ask questions of financial advisors,” Harding says. “But there is no such thing as a dumb question. If your advisor makes you feel silly for asking, find another advisor.”
“When we understand what’s happening, we can invest accordingly,” she says.
Lemke points out as the economic clout of women continues to rise, “… accordingly, they want to invest and grow their wealth responsibly,” she says.
She encourages women to seek out and rely on a trusted financial advisor for advice; someone who can develop a wealth management and estate plan that aligns with their unique needs and goals.
“Education, setting a financial plan and determining one’s risk tolerance are necessary steps to generate appropriate risk-adjusted returns over time,” Lemke says.
Invest like a woman
It’s a myth that women are more conservative investors than men, and care less about returns, says Claire Blessing, managing director, client wealth management, at Gluskin Sheff.
In reality, Blessing says some women today may be more risk-tolerant given they tend to earn less in their careers versus men and live longer, which means their investments need to grow more and last for more years.
Many women are also controlling more of the financial assets and are increasingly responsible for their families’ budgeting and longer-term plans
Blessing sees more women today getting educated about investing and active in their portfolio management decisions. Some are also engaging their children in their investing activities.
“Women are proactively seeking education events to improve their investment knowledge and aren’t afraid to ask questions,” she says. “They’re also encouraging their daughters to take a more active role in understanding their investment portfolios and to get involved from an early age.”
Adds Blessing: “Women want to be in charge of their own destiny and not rely on others to do that for them. They are increasingly involved in the conversations about money and want to learn more. It’s a very good sign.”
Seven steps for women to build and maintain financial security
-Learn how to manage your money, including everything from paying bills to saving and investing
-Take stock of your assets: Whether you’re single, married, divorced or widowed, know what you own including property, a company pension and all investments (registered and non-registered)
-Determine your long-term financial and retirement goals, including your timeline to retirement and what you want to do in those years
-Work with a trusted advisor who understands your unique wealth management and estate planning goals and can develop a holistic plan
-Set up or update your power of attorney (including health directive) documents and your will to ensure your health and wealth are protected if you become incapacitated or pass away
-Ensure the appropriate beneficiaries are designated and kept up to date as your life circumstances change
-Consider insurance products to protect your income and assets, including living benefits (disability critical illness and long-term care protection) and life insurance (term and permanent coverage)
-Be your own financial advocate: Ask questions and seek out information as your life circumstances change