The Hidden Pitfalls Of Retirement Planning For Women

To try and level the playing field retirement planning for woman requires very careful thought and consideration. They need to start saving earlier and they must be fully aware of the risks of unexpected events.

- On average they live longer.

- Their working lives are often interrupted by children.

- They are more likely to suffer from an illness or a disease.

- The additional years they live are often lived in poor health.

- Throughout their working career they are likely to have been paid less.

So women are playing the financial retirement game on a very unlevel playing field!

All these potentially negative factors must be considered with retirement planning for women. From an early age women need to understand that they need to look after themselves financially. Carefully considering and covering all the potential risk factors.

Leaving school or university today's woman must consider the many different roles that she will play in her life. From the start she will often be at a financial disadvantage due to unfair discrimination in the workplace.

There is still discrimination. The reality is that woman still earn less than their male counterparts. As a consequence of earning less they save less, they tend to spend more money on the household and still depend on their partners to provide for their retirement.

Society is rapidly changing. This has resulted in a change of expectations. Woman must now take into account that about three quarters of them will spend the last third of their lives on their own. When doing her financial planning she should also consider that over a half of marriages end in divorce.

There is also an increasing number of single mothers having to take on the full responsibility of their family and to provide for the future.

Many woman take time off to have children and to be with them in their early years. At these times they don't earn any money. But they are indirectly making a significant financial contribution. The value of this is easily seen if for some reason she is not there and all the services she provides have to be bought! So in trying to level the unlevel playing field woman must consider all their risks and financial handicaps.

When women take time off to have children they do not generally contribute to a pension plan during this period. Also in many cases woman switched jobs more often than men do.

Although the irrational situation of women retiring earlier than men is being abolished, they save for a shorter period and with longer life expectancy draw for a longer period.

So even if a woman has the same pension capital she will generally receive a lower monthly pension as it is calculated to be paid out for a longer period of time.

The rule of thumb is you need about 15 times your annual salary at retirement to receive a pension of 80% of your final salary. It has been calculated that this should be adequate, after inflation, to maintain your standard of living after retirement.

Retirement planning for women must recognise the unfair playing field and their vulnerability. Their financial security in retirement depends on many external factors from longevity to earnings and health... but the one element they can control is their plan. Start today.