Women and money: how to retire comfortably

Through my years as a lawyer, I’ve seen many couples retire to Panama, but few single women. Occasionally, I will have a widow who chooses to stay in Panama after the death of her spouse. Nonetheless, it is also equally likely that she will choose to move “back home”, closer to family and friends.

Unless she has built up a strong network in the expat community where she lives, she will sell up the home and simply move to where she has a better support system.

On the other hand, I know many single men that choose to move overseas alone. Men are happy to live out their days as expats. And I’m curious about the differences.

Women saving money

Reading through the myriad of information available online, I find women typically squirrel away 10% of their income into savings. Men, on the other hand, might only save 8%. Unfortunately, with a gender pay gap of anywhere from 20–33%, even with saving a higher percentage of their earnings, women are still saving less than men!

At the end of the day, women are making decisions about their financial future, but with less money.

The challenges we face include:

  • earning less
  • working fewer years (at least if you take time off for having a family)
  • living longer
  • making conservative investment choices

Additionally, women are more likely than men to take time off work to serve as caregivers to ageing family members.

At the same time, women fail to plan for the life events that affect money. These include marriage, kids, divorce, caring for ageing parents, widowhood, and their end-of-life care.

While women might keep an emergency fund for the washing machine breaking down, they don’t have an emergency fund for life emergencies!

How a woman chooses to invest:

Another difference between ladies and gentlemen is their choice of investments. Women save. Men invest. For example, if you look at the statistics for an online brokerage account, women hold only 28–33% of these accounts. The rest are all men.

Most retirement and financial advisors indicate that the ladies are more conservative in their strategies.

From where I sit as a lawyer, the ladies that I have known that were financially set had made investments in real estate or sold their businesses. They were not retiring with savings from a retirement plan or pension fund.

The gender of money

One of the curiosities that I came across as I prepared this post was the following:

  • Women blog about being thrifty & frugal
  • Men blog about investing and growing their wealth

In fact, if I look at girlie magazines, the focus appears to be on buying, rather than spending money as an investment. Men, on the other hand, read articles that emphasise money — notice the language used!

According to a 2018 UBS study, 59% of widows and divorcees wished they had been more involved in their long-term financial decisions and a whopping 74% did not consider themselves knowledgeable about investing!

Biases against women

As if these biases were not enough of a challenge, a woman will use her credit card when strapped for cash, whereas a man is more likely to get a personal loan from the bank. This is, in part, a woman receives fewer loan approvals!

Another point of bias that I was unaware of — women leave university with more debt than guys because there is even gender bias with parents! Parents are more likely to set aside money for their son’s education than for a daughter’s!

As I already mentioned, even when you are reading a magazine, you are getting subtle messages. Women are told how to save money as they spend. Men are told to save and invest their money.

The small differences that make a difference

While most married couples consider that they are modern and go 50–50 on the bills, data and research show spending happens differently between the sexes. Mums outspend dads on:

So, while the couple may go 50–50 on the base household items, the wife then picks up the extra tabs on the unseen. Unfortunately, a mother will look at the day-to-day necessities, rather than looking at the long-term necessities of her retirement.

Even if we look at separate accounts, we find something curious.

  • A woman will often have a separate credit card she hasn’t told her husband about.
  • A man will be more likely to have separate savings account he hasn’t told his wife about.

Women, family responsibilities and retirement:

Here’s the kicker:

80% of women will die either single, divorced or widowed!

Yeap… you read that right. Because it is very likely that a woman will outlive her spouse. This often means that women find themselves with less support — financial and emotional — as they age.

When you add to that the number of women who care for their elderly parents, taking early retirement in their fifties, you can see how financial planning goes out the window. Some women can even find themselves “sandwiched” — caring for their children AND their parents or older family members. For many of these ladies, this means that they never get their income levels back up to building a sizable retirement account.

Over the past five years, I watched a client care for her husband with dementia. He had taken care of all their financial matters throughout their marriage. Now, in the end, she knew of his investment accounts but was locked out of them. He had only arranged his financial matters in Panama — not the international ones which were theoretically taken care of by counsel overseas. He hadn’t bothered to get that paperwork updated. I’m sure he thought there would always be time. She had no access to any of those funds in order to care for him, without going through a custodianship process in the courts.

What will you do with this information?

Knowing that these situations and challenges exist is only the first step. But knowing, without doing, is not really knowing!

  • What plans will you begin to make and implement for your future?
  • How will you begin to look at the numbers, check out investment possibilities, get a retirement planner or adviser?
  • Will you make sure that all your documents are in order — either for yourself or with a spouse?

This information is not just for you to read and be informed by.

The real question is what will you do now that you know?

Originally published at https://koru.services on November 13, 2019.

blogger, coach, and international law consultant. Writing about faith, growth, transformation & change.

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