Four reasons why a woman’s financial path is not smOOth sailing

Posted by on 12/04/22

Aside from investing providing a support to achieving financial goals and freedom, the list of reasons for women to invest and maximise their wealth is longer of than that of men. Women typically meet more financial milestones and challenges in their lifetime which makes the requirement for financial planning and preparation all the more important.

1. The gender pay gap

Not only are we concerned about the gender pay gap, but also the impact it has on the gender investing gap. Investing can be the difference between a having a great career and having a great future. Right now, not only are men earning more but they are also investing more. Its thought there are three main reasons this is happening:

  • The financial sector has historically been designed for men, by men. It is a male dominated industry, but now, with women’s wealth on the rise Female Folio and some other fantastic companies out there are on a mission, a mission to ensure women feel confident and comfortable in the industry.
  • Women do not have as much disposable cash. Women are paid less, full stop.
  • Lack of female representation in high ranking roles – from board members to CEO’s. At the end of 2021, it was reported that on the FTSE 100 there were only eight female CEO’s.

2. Maternity and childcare

Women spend less time in the workforce than men, as they are often primary care givers – taking time off to give birth, and look after children or elderly relatives. These intervals taken from a women’s career often slow the pace of progression and reduce the hours spent in the workplace – depleting earning capacity. This has a consequential effect on the investable assets and eventual pension pot. Not only that, but women are much more likely to spend on others before they spend on themselves.

3. Divorce

While divorce isn’t easy for anyone, it can often come with special hurdles for women.  During a divorce, assets accumulated during the marriage will be separated. Following this process, it’s important for women to ensure that appropriate changes have been made, such as cancelling joint accounts, retitling assets in their name, updating account beneficiaries, reviewing insurance coverage and updating estate plans.

While it's not true for all marriages, there are many women who have been in a traditional male breadwinner model marriage and suddenly find themselves alone and overwhelmed with managing their finances for the first time in many years. Many women who take the majority custody of their children will do everything in their bargaining power to keep the nest for their chicks. By keeping the security and refuge of the family home, many sacrifice liquid assets that can impact the security of their financial future.

4. Longer life expectancy

The average 40-year-old female has around a 1 in 10 chance of living to 100. Here are a few things to think about it comes to preparing for later life:

  • Your pension. Do you know what is in your pension? Do you know when you can comfortably retire? Why not. Get the most out of your later life by having a plan for your pension!
  • Passing down money. Inheritance Tax is currently 40% on the value of the deceased person’s estate. It can be expensive, and over complicated – passing on money sooner can help all parties
  • Having a will in place. Having a legally binding will in place, and up to date – reviewing every five years can help plan for your loved ones
  • The cost of care. The cost of care in England can range from £35,412 to £50,908 a year on average. This is without inflation, and without the amount of years in care you needed increasing. Due to a woman’s longer life expectancy, they may be having to fork out an extra 5 years worth of care than male counterparts. Something serious to consider when women are already likely to retire with 1/5th of the pension wealth of a man at 65!