Think ahead for your twilight years

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Think ahead for your twilight years

Dubai - On an average, a woman retiring at age 65 can expect to live another 19 years, or three years longer than a man retiring at the same age.

By Leena Parwani

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Published: Sun 10 Apr 2016, 12:00 AM

Last updated: Sun 10 Apr 2016, 2:00 AM

The importance of financial planning cannot be overstated. Committing to a financial planning process can provide you with the education and roadmap to achieve your financial goals. Women and men alike are concerned with financial security, funding education, care of their family, health needs, and coping with life changing events such as birth, marriage, divorce, retirement, and death. However, women are more likely to be responsible for taking care of others, which may make planning more complex.
Also, women on average live longer than men, and are therefore more likely to be the sole financial decision-makers late in life. In addition to living longer than men, women often earn less at their jobs and spend fewer years in the workforce. On an average, a woman retiring at age 65 can expect to live another 19 years, or three years longer than a man retiring at the same age.
Secondly, working women are also more likely than men to interrupt their careers to take care of family members. Therefore, they are more likely to work fewer years and contribute less toward their retirement, resulting in lower lifetime savings.
Therefore, given longer life expectancies, it is extremely important for women to begin to plan for their retirement years as early as possible. This means understanding personal goals such as the age at which you would like to retire and how much you would like to live on. Benchmarks such as having enough assets/income to replace 75 per cent to 80 per cent of your pre-retirement income, and using four per cent withdrawal rate from retirement savings, provide a good starting point, although they should be adjusted based on your individual goals, financial position, and risk tolerance. It is important to work with a financial advisor to determine an appropriate financial plan to help meet your and your family's unique needs and goals.
Financial plan advantages
A financial plan can provide the education and strategy you need to address these issues in a coordinated and comprehensive manner. You will typically begin the financial planning process by discussing your goals and objectives with your financial advisor and gathering the financial documents necessary for him or her to gain an understanding of your net worth and cash flow. From there, you will work together to develop an action plan that will outline the next steps toward providing for your needs and reaching your goals.
One's own financial security and the financial security of one's loved ones are important issues for everyone. Many women handle financial decisions jointly with their significant others, and developing a plan as a couple can ensure that financial needs are met regardless of who stays healthier and lives longer. There are also some women who rely on their significant others to handle financial matters, but they are more likely than they may realize to be in a position at some point in their lives that requires them to take sole ownership and control of their finances, so developing a plan may be even more important for them.
5-step strategy
This is a five-step process that involves partnering with a Financial Advisor: 
1. Gathering information - Determine the current situation - special family requirements, assets and liabilities, financial needs, current and anticipated income, and tolerance for investment risk.
2. Setting financial goals - Identify education objectives for children and grandchildren, retirement age and income goals, insurance considerations and estate concerns. 
3. Developing a financial plan - Outline the steps necessary to meet the goals that have been identified. Be as specific as possible.
4. Implementing the plan - Commit to action immediately. The best plan in the world will fail if it's never started.
5. Reviewing and updating the plan periodically - The inevitable changes of life may require adjustments to the plan. Periodic reviews will provide opportunities to identify these events and make the necessary changes.  
A wide range of options
There are several methods of savings women can undertake; for example; some women are simply comfortable with saving through fixed deposits and financial advisors can direct them on which fixed deposits would provide maximum returns if they are not interested, or fear, stepping into bond or stock investments. On the other hand, some are willing to take a higher risk for higher returns and end up putting their money into equities and issue bonds, etc. Banks are also another common means of saving money.
Nonetheless; you, and you alone, are ultimately responsible for your financial well-being. Your decisions will affect how you live on a day-to-day basis and in the long term. Handling the financial issues associated with starting out, establishing a household and assume more responsibilities can be stressful. A solid financial foundation can help you spend less time and effort worrying about your finances so you can devote your time and energy to other important matters like your job, your family and your future.
The writer is founder and chief executive of iCare Advisory Insurance Brokers. Views expressed are her own and do not reflect the newspaper's policy.


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