Episode 28: Why Do Women Need Their Own Financial Plan?

Published: December 3, 2020 | Updated on: December 2, 2020

Thank you for joining us for Episode 28 of our Money Wisdom Question Series, where we answer common financial and retirement investment questions. Today’s question is, “Why do women need their own financial plan?”

Statistically Women Live Longer

There’s one big reason why a woman should have their own financial plan and it’s because statistically, women live longer. Women will tend to live seven years longer than men. So, I’m married to Wendy. She’s three years younger than me, so she should have a financial plan that goes 10 years past my life expectancy. This is really important because of two things:

  1. You need to save more money
  2. Inflation – which is affected by you living longer
Women Need About 34% More Money

I just ran a quick calculation in my office. It looks like women, depending on what interest rate they earn on their money, need about 34% more money to be able to last for the rest of their lives versus a man. I can run a calculation and it says for a man taking a certain withdrawal rate, earning a certain interest rate, his money would last for 14 years.

Let’s say from age 70 to 84 for a woman to have that money last for her life expectancy, another seven years takes about 34% more money. Just kind of a guideline there. Obviously, some of those numbers can change as far as interest rates and so on. For somebody to need 34% more money, that’s a lot. It’s really important that a woman has her own financial plan. For Wendy, we do calculations based on her living longer than I do.

Takeaways

Women living longer is the main reason they need to have their own financial plan. There are a number of other minor reasons like earnings, rates, and so on. I would encourage every woman to have their own financial plan. Have your own plan based on your own assumptions and based on your own investment goals and risk tolerance. That will give you the peace of mind to know that you’re set up OK for retirement, whether you’re already in retirement or you’re getting ready to retire.

Thanks for joining me and I hope you found this information helpful!

P.S. If you enjoyed this topic and want to learn more, download our offer, “WISER’s Financial Planning Workbook for Women”.

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